NEW DELHI: Paving way for a big development in India’s booming capital market, the Securities and Exchange Board of India (Sebi) is introducing a beta version of the T+0 settlement cycle starting March 28. Under this system, trades will be settled on the same day they are made unlike the current T+1 settlement system where payment is received the next day.
The beta launch, approved by regulator on last week, will initially include 25 stocks and a limited number of brokers. It is not cleared which stocks will be part of this beta version. Also, the T+0 settlement will be only for trades executed between 09:15 am and 01:45 pm.
SEBI in September 2021 had allowed for introduction of T+1 rolling settlement cycle. Stock exchanges, clearing corporations and depositories (collectively referred to as “Market Infrastructure Institutions (Mlls” jointly decided to shift to T+1 settlement cycle in a phased manner, which was fully implemented on January 27, 2023.
“The significant evolution of technology, architecture and capacity of MIIs, presents opportunities for further advancing clearing and settlement timelines. Further, India’s depository ecosystem has visibility of individual client level holdings in digital form, and so has the ability to effect immediate transfer of securities and also India’s payments and settlements ecosystem has long allowed for real time transfer of funds,” said Sebi in a circular on Thursday.
The regulator believes a shortened settlement cycle will bring cost and time efficiency, transparency in charges to investors and strengthen risk management at clearing corporations and the overall securities market ecosystem.
To ensure smooth implementation, the Mlls will have publish operational guidelines (including mechanism for trading, clearing and settlement, risk management, etc.) and
Frequently Asked Questions (FAQS) along with the list of 25 scrips for the Beta version of T+0 settlement cycle and disseminate the same on their respective websites.
The surveillance measures as applicable in T+1 settlement cycle will be applicable to scrips in T+0 settlement cycle. The timings for one continuous trading session has been kept from 09:15 AM to 1:30 PM.