Shortened settlement cycle for equity trades successful: CSE

The implementation of the shortened settlement cycle for equity trades by the Colombo Stock Exchange (CSE) has been successful, Sri Lanka’s capital market operator said. The effort was executed with the first settlement under the T+2 cycle taking place on June 12, 2024, marking a significant milestone in the Sri Lankan capital market operations. 
According to the CSE, the investors have experienced swift payment processing, receiving their funds within two days for the first time since the cycle reduction.
Following the collaborative efforts with the Securities and Exchange Commission of Sri Lanka and industry stakeholders, the transition to a T+2 settlement cycle on June 10, 2024, has yielded tangible results.

The investors now benefit from expedited fund transfers and security exchanges, with transactions settling within a shorter timeframe, the CSE said.
Senior Vice President Enterprise Risk Management and Post-Trade Settlement Dulani Warnakulasooriya mentioned that the change would further benefit the market participants by freeing up working capital and lowering the collateral requirements.
The successful implementation of the shortened settlement cycle not only reduces operational risks but also amplifies market liquidity. Further, this achievement underscores the effectiveness of the CSE’s strategic initiatives in enhancing investor experience, the CSE noted.