The Bermuda Stock Exchange will move to a T +2 (trade date plus two days) settlement cycle, effective Monday, October 23.

This follows an announcement last month by both the US Depository Trust Companies and Canada’s Central Securities Depositories (CSDs) that they were joining many European Union member states, Hong Kong, Australia and New Zealand in migrating to the shorter settlement period.

BSX operations manager Neville Caines said: “The BSX’s move to a T+2 settlement cycle is in keeping with the long-term goal of global harmonisation of exchange settlement and further aligning Bermuda with much larger CSDs seeking to reduce settlement risk and improve capital efficiency.”

After the 2008 global financial crisis, the industry increased its focus on reducing risk, achieving greater transparency and improving efficiency in order to establish a safer market environment. As a result, markets across the globe are transitioning to a T+2 settlement cycle.

Mr Caines said: “Central securities depositories such as the Bermuda Securities Depository, better known as the BSD, are systemically important infrastructures in modern securities markets.

“They perform crucial services to support the registration, safekeeping and ultimately the safe and efficient transfer of securities. Shortening the settlement cycle will reduce both credit and counterparty risk and further align our operating processes, increasing market efficiency in keeping with global standards.”

The BSX implementation of T+2 comes after approval from the Bermuda Monetary Authority (BMA), which regulates the Exchange, and consultation with the market. “Consultation has been key,” Mr Caines said. “It was very important that the market be aware and supportive of the move.

“Collectively it is acknowledged that the move to T+2 is a positive step for Bermuda, as the BSX’s continues to drive standards forward in line with international market practices.”

Mr Caines added that while minor operational and technology changes were required, the move had not come at any great cost or inconvenience to the Exchange.