Change to T+2

[Muschu]

Hi

I read a post today on another forum that the change of duration from 3 to 2 days between the buy/sell and the settlement date has effected trading significantly.

Any thoughts on this? It hadn't crossed my mind until I read that post.

Thanks

[Joe - if this doesn't warrant a new topic then please shift it wherever....]

 

[pixel]

Hi

I read a post today on another forum that the change of duration from 3 to 2 days between the buy/sell and the settlement date has effected trading significantly.

Any thoughts on this? It hadn't crossed my mind until I read that post.

Thanks

[Joe - if this doesn't warrant a new topic then please shift it wherever....]

Some online brokers - I believe Commsec among them - would allow you to "overspend" your bank balance and buy shares without having to pay for them if you sell them before settlement. That would have the effect of an interest-free loan for - under the old T+3 rule - 3 days, now reduced to 2 days.
I consider such a "trading method" extremely risky because it leaves one vulnerable to surprises like sell-down, trading halt, and other nasties. But sure - if we're talking of the same "another forum", I can imagine that quite a number of punters there may use it and are getting upset.
However, I reckon neither day traders nor honest investors should be significantly impacted.

 

[Muschu]

Some online brokers - I believe Commsec among them - would allow you to "overspend" your bank balance and buy shares without having to pay for them if you sell them before settlement. That would have the effect of an interest-free loan for - under the old T+3 rule - 3 days, now reduced to 2 days.
I consider such a "trading method" extremely risky because it leaves one vulnerable to surprises like sell-down, trading halt, and other nasties. But sure - if we're talking of the same "another forum", I can imagine that quite a number of punters there may use it and are getting upset.
However, I reckon neither day traders nor honest investors should be significantly impacted.

Good logic once again Pixel.... Many thanks.

Regards

R

 

[Muschu]

Actually my comment was in relation to HZR which rose exceptionally rapidly to 85c and generally with VERY few sellers. Then sellers started appearing from nowhere and the price went back to around 52c.

Some comments on the other forum referred to this being due to T+2 and/or escrow shares. The number of units for sale still outnumbers those wanted but the SP has risen again this morning.

A later comment referred to this escalation in trades being due to institutional activity...

So I got, and still am really, quite lost by this... I do hold and am well in front -- so maybe I should just become accustomed to the confusion.

 

[skyQuake]

Actually my comment was in relation to HZR which rose exceptionally rapidly to 85c and generally with VERY few sellers. Then sellers started appearing from nowhere and the price went back to around 52c.

Some comments on the other forum referred to this being due to T+2 and/or escrow shares. The number of units for sale still outnumbers those wanted but the SP has risen again this morning.

A later comment referred to this escalation in trades being due to institutional activity...

So I got, and still am really, quite lost by this... I do hold and am well in front -- so maybe I should just become accustomed to the confusion.

The T+2 part impacting trade is rubbish. Escrow shares hitting market (or the perception thereof) is the more likely culprit