T+3 refers to the settlement system of Bursa Malaysia (the Exchange). Investors buying or selling securities, including shares of public-listed companies, on a “ready basis”, will be bound by it. In essence, the “T” refers to the day you do your trade and the “3” refers to the three market days given for you to settle your transactions.

The settlement system was shortened from T+5 to T+3 in 2000, to increase efficiency and liquidity of the stock market. Shorter settlement cycle reduces settlement risk, as investors will be able to receive their money or shares earlier.

How to determine T+3?
For example, if you buy 100 units of A Bhd shares on Monday, July 1 (this is the T day), the last day to pay for your purchase will be before 12.30pm on Thursday, July 4 (the T+3 day). On that day too, your Central Depository System (CDS) account will be credited with A Bhd shares.

T+3 is also applicable when you sell your shares. For example, if you sell 100 units of B Bhd shares on Monday July 1, you must have B Bhd shares in your CDS account before 12.30pm on T+2 i.e. Wednesday.