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SEBI Instant Settlement Update: A new phase is starting for investors trading in the stock market from the last week of the current month. Stock market regulator Securities Exchange Board of India (SEBI) is going to introduce T+0 trade settlement cycle from March 28, 2024, which is being seen as a major step towards instant settlements. Presently T+0 trade settlement is being introduced on an optional basis.
Currently there was a provision for T+1 settlement
Sebi is going to introduce T+0 trade settlement cycle on optional basis from March 28, Sebi Chairperson Madhabi Puri Buch said during an event at mutual fund body AMFI. Last year itself, the SEBI chief had hinted at starting intra-day settlement in the stock market from March and had assured quick settlement within 12 months. Currently T+1 trade settlement provision is applicable in the Indian market.
SEBI released consultant paper
SEBI also issued an advisory paper seeking suggestions on immediate settlement of December 2023. In the advisory paper, SEBI said that in today's era, reliability, low costs and fast transactions are the features that attract investors. In such a situation, reducing the settlement time for buying and selling shares will help in attracting investors towards this asset class.
How to start?
SEBI said that in the first phase, the T+0 settlement cycle will be opened for trading by 1.30 pm and the settlement process of funds and stocks will be completed by 4.30 pm. According to SEBI's advisory paper, the second phase will have an alternative instant settlement option in which trade-by-trade settlement of both funds and securities will be done. After the implementation of the second phase, the option of T+0 of the first phase will be closed.
Very few countries in the world have such a system
Indian stock market currently has T+1 settlement provision. That is, the day the investor buys or sells a share, the shares are deposited in the demat account the next day or on selling the shares, the money is deposited in the investor's account. Once the rules for instant settlement transactions are implemented, trades will be settled immediately. There are very few countries in the world where T+1 settlement rule is applicable in which India is also going to join.