T + 2 IS FINALLY HERE!

Yes T+2 has finally arrived!

What I hear you say – Aren’t you a little late? Wasn’t T2 on offer way back in 1999?

No I’m not talking about the “darling” of the market Telstra, but rather the decision by the ASX to reduce the time from Trade to Settlement from T+3 by 1 day to T+2. We are hardly at the cutting edge of world business practices here with many countries adopting T+2 Settlement in October 2014 – Hong Kong and Europe included but this improvement will bring us in line with industry standards.

In fact the Chicago Mercantile Exchange decided last year to end the 167 year Dynasty! Closing its open outcry trading system in favour of a fully computerised alternative. The frenetic clips that are always played on the news on high volatility days of wild traders in their funny coloured coats yelling and screaming, waving their arms and hands about in the strangest ways signalling orders to buy and sell will just become another lost art. Like that of shoeing a horse or making boiled lollies. In fact I can envisage a time in the future where we could add the example of “driving an automobile…”

But I digress!

The ASX Website provides the following explanation for this change in rules when it says

“Shortening the settlement period by one business day creates capital and margin savings for industry, and a faster settlement of transactions for investors.  It also lowers systemic risk for the market as a whole by reducing counterparty risk for individual investors, participants and the clearing house.”

So what is the common theme in our writing – that we strive for “productivity gains” and here you have an announcement confirming exactly that – it “creates capital and margin savings for industry” AND “lowers systemic risk”. This is VERY important!

It increases Productivity and hence Profitability! All of which will be reflected in higher land prices; but I will not guarantee lower brokerage costs….

To really make the point of how quickly we are advancing, I couldn’t resist showing the picture directly off the Original 1999 T2 Share Offer Document – do they still even make phones with a cord? And Oh, that computer in the bottom left!

Just remember, in the not too distance future we will be saying “Remember when WE actually had to drive a car to get around…..”

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