Muscat Clearing & Depository Company Accelerates Efficiency with T+2 Settlement Cycle for Oman’s Capital Market
Muscat Clearing & Depository Company SAOC (MCD) has announced a significant advancement in Oman’s capital market by implementing a T+2 settlement cycle for securities trading. This new cycle will reduce the settlement period from three business days (T+3) to two business days (T+2) following the trade date. This transition marks a pivotal moment in the evolution of the Sultanate’s capital market infrastructure, aligning it with global standards widely adopted across financial markets.
Enhancing Market Efficiency and Attractiveness
The shift to the T+2 settlement cycle is designed to enhance the efficiency and resilience of post-trade processes. By shortening the settlement timeframe, MCD aims to mitigate counterparty and settlement risks, accelerate capital turnover, and improve operational efficiency for participants in the Muscat Stock Exchange. This change is expected to bolster the attractiveness of Oman’s capital market to both regional and international investors.
Effective from September 1, 2026, the T+2 settlement cycle will apply to all transactions executed in the Omani capital market, encompassing listed securities such as equities, bonds, sukuk, and funds. This decision follows extensive coordination with market participants and stakeholders, ensuring a smooth transition.
Strategic Modernization of Market Infrastructure
MCD has emphasized that this initiative is part of a broader strategy to modernize the operational framework of the market. The organization is committed to ensuring that its infrastructure remains aligned with evolving international standards. Many leading exchanges and financial markets globally have adopted the T+2 settlement cycle to enhance transparency, strengthen market stability, and improve trading efficiency.
The transition is anticipated to improve market liquidity by allowing investors quicker access to their funds post-transaction. A faster settlement cycle can stimulate increased trading activity by reducing the time required to complete transactions, thereby enabling investors to redeploy capital more efficiently.
Comprehensive Preparations for Implementation
Mohamed bin Said Al Abri, Chief Executive Officer of MCD, noted that the transition to the T+2 cycle follows thorough preparation across the entire market ecosystem. He stated that the implementation comes after the approval of the legal framework by the Financial Services Authority, alongside extensive coordination with brokers, custodians, clearing members, financial institutions, and investors.
MCD has taken into account various regulatory aspects related to the settlement of custodian client transactions, particularly the Delivery versus Payment (DVP) procedures, while considering time zone differences and the varying opening hours of financial markets. These preparations included system enhancements, operational readiness assessments, and close collaboration with all stakeholders to ensure a seamless transition.
Risk Mitigation and Global Alignment
The introduction of the T+2 settlement cycle is expected to mitigate various risks, including credit, market, and liquidity risks, while aligning the market with global financial trends. This reflects the ongoing commitment of Oman’s capital market institutions to strengthen the regulatory and operational framework, supporting long-term growth and competitiveness.
In recent years, MCD has undertaken numerous initiatives aimed at enhancing market transparency, improving governance standards, and expanding investor participation. The T+2 settlement cycle builds upon these efforts, reinforcing the Muscat Stock Exchange’s position as a desirable investment destination within the region.
Market participants have welcomed this development, recognizing that alignment with global settlement practices facilitates cross-border investment and enhances the overall efficiency of trading and settlement processes. MCD remains dedicated to monitoring global advancements in depository, clearing, and settlement operations, including the international shift toward a shortened settlement cycle (T+1), which is expected to further improve market efficiency.
Conclusion
The transition to a T+2 settlement cycle represents a crucial step in the evolution of Oman’s capital market. As it continues to adopt international best practices and modernize its financial market infrastructure, the initiative supports sustainable economic development and strengthens investor confidence.
Muscat Clearing & Depository Company was established under Royal Decree no. 82/98 on November 25, 1998, to manage securities depository and registration. MCD commenced operations on February 1, 1999, as an Omani closed joint-stock company, primarily owned by the Muscat Stock Exchange, along with banks, investment institutions, and brokerage firms.
Source: www.zawya.com
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