Sebi go-ahead for same-day settlement on select stocks from March 28

Come March 28, a select set of stocks would move to same-day settlement—known as T+0 in market parlance—as the Securities and Exchange Board of India (Sebi) has given its go-ahead to introduce the beta version of the shortened settlement cycle on an optional basis.

The capital markets regulator, in a circular issued on Thursday, stated that the new framework would be introduced for a limited set of 25 stocks and also a limited set of brokers.

“… it has been decided to put in place a framework for introduction of the Beta version of T+0 settlement cycle on optional basis in addition to the existing T+1 settlement cycle in equity cash market, for a limited set of 25 scrips and with a limited number of brokers,” stated the Sebi circular.

This assumes significance as work related to the introduction of a shorter settlement cycle was happening for many months now with all stakeholders of the capital market, especially market infrastructure intermediaries (MIIs) like exchanges, depositories and clearing corporations, were working together to reduce the settlement cycle from the current T+1 to same-day and ultimately move towards instant settlement.

“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,” stated the Sebi circular.

“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,” it added.

As per the latest Sebi circular, the MIIs will have to disseminate on a periodic basis, the list of brokers that are participating in the beta version of T+0 settlement cycle on their websites and also provide a fortnightly report on the progress of activities in the beta version of T+0 settlement cycle till further direction.