Traders could get securities two days after the transaction date instead of the three it takes now under changes proposed by the Singapore Exchange (SGX).
It also hopes to offer a new service that would allow investors to let their brokers see the holdings in their SGX Central Depository (CDP) direct accounts. This gives more advisory capabilities to the broker who could then offer portfolio management services.
The proposals could be implemented in the second half of next year, following a public consultation exercise.
The key change is the shorter securities settlement cycle, a move floated by the SGX and the Monetary Authority of Singapore (MAS) in 2014. The two-day period is already par for the course in the European Union, as well as on the stock exchanges in Sydney, Hong Kong and New York. It was meant to kick in here last year but SGX cited a lack of market readiness as the main obstacle.
The industry is shifting off a central operating system provided by SGX to individual back-office platforms operated by bourse members.
Mr Nico Torchetti, SGX senior-vice-president and head of market services, told a briefing yesterday: "The overall changes in our framework are basically related to our post-trade modernisation project.We have done the first phase. This is part of the second phase."
The SGX also suggests carrying out Singapore-dollar CDP cash transactions through the MAS electronic inter-bank payment and fund transfer system, rather than through commercial banks.
This would let the bourse operator axe the securities overdraft that it now creates in the rare event of a failed securities delivery.
The SGX also wants to scrap the delay between securities and money changing hands, and instead make the settlement process simultaneous for both.
Chief executive Loh Boon Chye said in a statement: "The changes proposed are aimed at reducing systemic risks and aligning the clearing and settlement processes of the Singapore market with global practices.
"They will also strengthen Singapore's position as an international financial centre."
UOB Kay Hian remisier Jimmy Ho, who is also president of the Society of Remisiers (Singapore), said the suggested broker-linked balance system "is an improvement in itself".
He said: "Previously, we couldn't see the balances, and when clients called - especially the older folks - they weren't always sure of how much they had."
But Mr Ho was less of a fan of shorter settlement cycles for securities transactions, saying that "it will further dampen liquidity in the market". He added: "If it's reduced by one day, it will affect people's interest in the market, because many already feel that three days is not long enough to have any contra play. So, the speculative aspect will be missing, or less interesting."
Securities Investors Association (Singapore) president David Gerald noted: "The investors can have the shares credited to their account faster, thereby reducing risk, allowing investors to react in time to any market changes...
"These initiatives by SGX can result in better liquidity if the brokers are able to help investors to better monitor their investments and provide necessary advice."
