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Mumbai: The record making Indian stock market is now going to create new history in the trading cycle also. Now from March 28, 2024, trading in Indian stock markets and instant same-day settlement of stocks and funds i.e. T-trading day plus zero (T+0) settlement will be implemented on an optional basis.
Market regulator SEBI will launch the T+0 trading cycle settlement system on an optional basis by March 28. SEBI Chairman Madhabi Puri Buch has announced this on the occasion of a program of Association of Mutual Funds in India (AMFI). T+0 means immediate settlement. Currently, Indian stock exchanges operate on T+1 settlement cycle for all shares. Buch said that this settlement system will be implemented in the entire market from March 2025.
Buch had said last year that SEBI wants T+0 settlement rules from the end of March, 2024. On the day of such a deal, India will become the second country to adopt the compromise method. Earlier this system was implemented in China. Trade settlement usually takes place within 2 days in most major economies.
SEBI had said in December last year that it planned to implement the T+0 agreement in phases. In the first phase, T+0 cycle will be implemented for trading till 1.30 pm. After this, settlement of funds and securities will be completed by 4.30 pm. The second phase will have optional instant settlement for both funds and securities. Deals will be done till 3.30 pm. The alternative T+0 system of Phase I will be discontinued after the implementation of the alternative speedy settlement system of Phase II.
Initially the stocks eligible for T+0 settlement will include the top 500 listed companies of the country in terms of market capitalisation. These companies will enter the new settlement cycle in three phases based on market capitalization. The first 200 companies with the lowest market capitalization will be included in the new settlement cycle. After this, another 200 companies and finally 100 companies will be added in the new settlement cycle.
SEBI Chairman Madhavi Puri, while explaining the reason for adopting T+0 settlement cycle in the securities market, said that the biggest reason for this is the increasing attraction of investors in options like cryptocurrency.
Transactions in cryptocurrencies are settled hourly, which is why investors are rushing towards it regardless of the risk. In such a situation, with the aim of making the Indian stock markets stronger, faster and stronger with transparency, the market regulator is keen to implement instant settlement in equities also.