In a significant development aimed at enhancing the efficiency of Qatar's capital market, Edaa announced a reduction in the settlement period for transactions executed on the Qatar Stock Exchange from T+3 to T+2, starting from January 2024. This initiative comes in coordination with the Qatar Central Bank, the Qatar Financial Markets Authority, and the Qatar Stock Exchange, as part of efforts to modernise the mechanisms of the Qatari financial market, expedite trading activities, and attract investments in securities. The strategic initiative that complements the Qatar financial market development initiatives focuses on reducing the settlement period for trades executed on the Qatar Stock Exchange from three business days following the transaction (T+3) to only two business days (T+2).
"We collaborate with all partners, under the guidance of QFMA to achieve a set of short-term goals. Our key priorities are to facilitate transactions for our local and global investors, and to ensure operational efficiency. This initiative embodies our commitment to achieving these goals," said Sheikh Saif bin Abdullah al-Thani, chief executive officer of Edaa.
Edaa anticipates applying the new settlement period by the beginning of next year (January 2, 2024).
This will allow institutional investors, local and foreign portfolio managers to prepare to fulfil the technical requirements on their end.
Concurrently, Edaa will work with these stakeholders to provide support in applying the necessary regulatory and technical amendments, and coordinate with them to secure smooth settlement operations.
Global fund managers have been eyeing the fastest growing economy due to its strong macro fundamentals, especially after Doha unveiled its plans to enhance its liquefied natural gas production to 126mn tonnes per annum by 2027, which offered indirect benefits to the private sector as well.
In 2014, most markets in Europe transitioned to T+2 settlement cycle, while the settlement cycle in the US is T+2 for equities and corporate bonds and T+0 or T+1 for the money market instruments and government securities, and Hong Kong has 'T+2' cycle.
A key industry demand has been to shorten the settlement cycle in view of Qatar having the necessary enablers such as the market and technological infrastructure.
A cost-benefit analysis of the shortened settlement cycle has found that major bourses across the world favoured shortened settlement period as it helped reduce clearing and settlement risk as well as the overall costs for the securities' industry, thus making the market safer.
The significant improvements in straight through processing and the underlying technology over the last few years call for a shortened settlement cycle, which at this point of time greatly improves volume and liquidity in the system, market experts said.
Sheikh Saif bin Abdullah al-Thani, chief executive officer of Edaa