More trading hours and shorter settlement times on JSE

The Jamaica Stock Exchange just announced two exciting new changes. But how will it affect you and your money?

So it’s official!  Investors now have more time to do daily trades, because the JSE just extended trading hours from three and a half hours to five hours. 

The new trading hours are from 9:00 am to 2:00 pm each weekday. This has been a long time coming, investors have been asking for longer trading hours for years. 

An additional one and half hours is a lot, especially when you consider that if a stock hits a circuit breaker because the price goes too high or too low, trading for that stock gets paused for an hour.  So more time is great.

The JSE also officially transitioned from a T+2 to a T +1 Settlement Cycle. So let me explain that.

The ‘T’ here means Trading Day. Plus 2 means plus two business days.  Plus one means plus one business day. 

So, you may think that when you buy or sell shares, everything happens immediately. Not true. There are actually two important dates involved in any trade. 

The transaction date is the day you make the trade. That’s different from the settlement date, which is the day the trade becomes official. 

When a trade is made, there’s a lot of work that goes on on the backend.

Payment has to be received and verified, the actual shares need to be transferred and the security’s transfer agent also has to verify the new shareholder and remove the old one. 

So on a T+2 settlement cycle, all that stuff would be completed in two business days. 

That’s why when companies pay dividends, they have a record date. You have to be a shareholder by the record date in order to receive dividends. So let’s say the record date was June 3.  If you bought the shares on June 3, you wouldn’t get the dividend because you still have to account for the two business days it takes to settle the transaction. You would’ve had to purchase the shares by June 1 to benefit.

But with the JSE, transitioning to a T+1 cycle, the settlement is now happening in just one business day. 

Of course, this is great news for the JSE.  Managing Director of the Jamaica Stock Exchange, Dr Marlene Street Forrest, pointed out that it will increase liquidity in the market, meaning more trades can happen more quickly.

The less time it takes to settle transactions, the more transactions can take place. Combined with longer trading hours, the market should have more movement.

And the best part, shorter settlement times mean quicker access to cash. When you sell your shares, you’ll only have to wait one business day to have access to the money you made from the sale.

And that’s the bottom line.