THE DELIVERY VERSUS PAYMENT AND T+2 SETTLEMENT SYSTEM WILL BE INTRODUCED SOON
According to Resolution No. 29 of the FRC - of 29 January, 2020 – it has been decided to introduce the Delivery versus Payment and T+2 settlement system, from the end of March, 2020.
In order to engage in trading in this new payment scheme, participants must deposit a certain amount of their money in advance, based on the level of risk, and position the remaining money within two business days. In doing so, it is possible to make such payments by participating in trading through securities companies that are clearing members of the Mongolian Securities Clearing Co Ltd.
Investors participating in securities trading through securities companies that are not members of the Mongolian Securities Clearing Co Ltd will participate in trading on current payment terms, or by placing funds in advance, but securities trading must take place after two days in compliance with T+2 settlement system.
Introduction of the the Delivery versus Payment and T+2 settlement system will have positive effects on market participants’ trading fees and costs. It will also improve market liquidity, and creating favourable conditions for foreign and domestic investors to participate in securities trading.
The reform of these procedure will play an important role in building the stock market infrastructure - in line with international standards - and improving the operation of the payment system. The implementation of this process will play an important role in developing the infrastructure on the stock exchange in line with international standards and enhancing payment system operations.