Adoption of T+2 Settlement Cycle in the Brazilian Capital Market
With implementation of the Post-Trade Integration Project (Project IPN) completed, introduction of cash equity market settlement in two business days (T+2), adopted in second-half 2017 on the world’s largest markets, has become an important item on the initiative agendas of B3 and its participants. Besides synchronization with the global system, shortening the settlement cycle from T+3 to T+2 offers the Brazilian market significant benefits, including capital optimization and systemic risk mitigation, entailing reduced collateral requirements and increased liquidity.
The potential benefits of a shorter settlement cycle, the guidelines issued by international organizations and the scale of non-resident investors’ participation in the Brazilian market require that financial agents, especially B3, design strategies for implementation of the T+2 settlement cycle.
As soon as Project IPN was completed and stabilized, B3 and its participants began discussing implementation of T+2 settlement on the Market Advisory Committees and in bilateral meetings. There is a consensus on the need to shorten the cash equity market settlement cycle to T+2 (Project T+2) in order to assure harmonization with the world’s major markets. Moreover, clear and frequent communication regarding stages, timetable and progress is crucial for engagement and the success of this project. In this context B3 and the Post-Trade Advisory Committee have joined forces in the Project T+2 Steering Committee, whose remit is summarized below.
1) Defining Project T+2’s operational details and business model by end-March 2018, as well as the respective timetable (subdivided into conception, development, testing and implementation), which will be officially announced to the market at the end of this first stage. The lead time for this project is expected to be between eight and 14 months.
2) Setting up technical working groups based on processes (allocation, prematching, foreign exchange, IPOs, rules and normative documents etc). The members of each group will be nominated by its chair, by the Post-Trade Advisory Committee and by B3 staff. 2 019/2018-VOP
3) Keeping the other Advisory Committees up to date on the progress of Project T+2, and collecting suggestions and comments from them.
4) Organizing meetings and workshops for participants and customers, to explain the workings of the new cycle and make sure everyone is on the same page.
5) Appraising complaints and other issues regarding the impact of Project T+2 that arise during its execution, and deciding how to address them.
Lastly, we hereby inform you that a Communication Group has been set up as one of the Project T+2 working groups. Its members are B3 staff and its remit is to keep all those involved up to date and to serve as a point of contact to clarify doubts and receive suggestions from financial agents, local investors and other interested parties.
Further information can be obtained from the Communication Group by telephone on +55 11 2565-5340/5986 or by email at projetoD2@b3.com.br.