The strategic move focuses on shortening the settlement period at the Qatar Stock Exchange and complements the Qatar financial market development initiatives. The move to T+2 further align the Qatar's capital market with international standards and make it more attractive to both domestic and foreign investors.
The endeavour is to follow the best international practices in the global financial markets in order to provide the best ways and functions to enhance the efficiency of Qatar’s securities market.
The settlement cycle has remained at trade date plus three business days (T+3) in Qatar, where the 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 from the present 77mn tonnes per annum, which offered indirect benefits to the private sector as well.
The ‘T+2’ settlement cycle ensures seamless international fund management, which in turn, helps in enhancing the competitive edge of the Qatari capital market, market sources said.
In conjunction with the launch of T+2 settlement, the QSE has amended the covered short selling procedures for exchange traded fund (ETF) units, and of the market maker, liquidity provider and qualified investor.
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 favour shortened settlement period as it helps 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.