The Securities and Exchange Board of India (SEBI) said on Tuesday that the top 500 stocks listed on the exchange will be eligible for the same-day settlement cycle (T+0) in a phased manner. These stocks will be available for settlement from January 31, 2025 onwards.
While SEBI’s move is aimed at speeding up the settlement cycle currently at T+1, the same-day settlement cycle will continue as an alternative.
Currently, only 25 stocks are available for T+0 settlement. The beta version of Settlement Cycle was launched in March this year, but the response has been mild, with negligible volume.
Brokers will be allowed to charge differential brokerage for the facility. Qualified stock brokers, or those classified as large brokers, are instructed to manage the size and volume of their clients, put processes and systems in place for smooth implementation.
In December last year, the regulator had proposed to launch a facility for clearing and settlement of funds and securities at T+0 on an optional basis. At a later stage, it was also proposed to bring an optional immediate settlement.
Under the T+0 trade cycle, the transaction will be settled on the same day after the market closes. If the investor has sold the shares, they will deposit the money in their account on the same day and the buyer will also get the shares in their demat account on the day of transaction.
Sebi announced a block deal window from 8.45 am to 9 am for the T+0 cycle in addition to the existing block deal windows for T+1 settlement.
A shorter settlement cycle will bring cost and time efficiency, transparency in fees to investors and strengthen risk management across clearing corporations and the overall securities market ecosystem.
The T+0 trade cycle is expected to provide flexibility in terms of faster payment of funds against securities to sellers and faster payment of securities against funds to buyers. This will allow investors to have better control over funds and securities.
For the securities market ecosystem, a shorter settlement cycle will further free up capital in the securities market, thereby enhancing overall market efficiency. This will enhance the overall risk management of Clearing Corporations (CCs) as trades are backed by advanced funds and securities.