Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch
Sebi, the capital markets regulator, said on Saturday that it plans to implement same-day settlement of stock exchange trades by March 2024 and, eventually, real-time settlement.
Already, the watchdog has shortened settlement times to as little as one day.
“Sebi wants the T plus zero (T+0) settlement norm in place by the end of March 2024, and T plus instantaneous settlement 12 months after that”, Buch told media after the regulator’s board meeting.
T+0 refers to same-day trade settlement, whereas instantaneous settlement refers to transaction settlement in real-time.
According to Buch, market participants believe that moving immediately from T+1 hour to T+instantaneous makes more sense because there is no value to be gained from the middle ground of T+0.
The investment banker-turned-regulator stated that Sebi is fully open to market makers’ recommendations on fast trade settlement.
She stated that the new settlement will run parallel to the current system and will be entirely optional.
Furthermore, it will be available on a limited number of significant products, and even those will be optional.
In January of this year, the country’s stock exchanges switched to the T+1 settlement, in which trades are settled the following working day. Previously, it was a T+2 system.
“The changes from T+2 to T+1 and T+ 1 hour have been eventless from an infrastructure point of view”, she added.
The success of the newly introduced Application supported by the locked amount (Asba) for secondary market transactions is critical to Sebi’s plans.
Certain international portfolio investors had previously expressed worry about the shortening of settlement cycles, citing forex-related risks.
In July, the chairperson stated that Sebi hoped to implement immediate settlement of trades on stock exchanges by the following fiscal year.
Later, in September, Sebi officials stated that the agency would implement one-hour trade settlements by the end of the fiscal year, with the goal of eventually making such operations instantaneous.
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