SEBI’s new initiative promises same-day settlement, boosting market liquidity and efficiency
The Indian capital market is set to witness a transformative shift with the introduction of the much-anticipated T+0 settlement, scheduled to go live on exchanges starting March 28. This move, initiated by the Securities and Exchange Board of India (SEBI), marks a significant milestone in the evolution of market settlement mechanisms.
T+0 Settlement refers to the process of settling trades on the same day they are executed. Under this framework, sellers of stocks will receive funds on the day of the sale itself, streamlining the settlement cycle compared to the current T+1 settlement system.
The primary advantage of T+0 settlement lies in its ability to provide investors with same-day access to funds and securities. This accelerated settlement process enhances liquidity and efficiency in the market, benefiting market participants across the board.
Market Timings and Implementation Phases: The T+0 settlement will operate within a continuous trading session from 9:15 a.m. to 1:30 p.m. SEBI has outlined a phased implementation plan for the equity cash segment:
- Phase 1: Introduces an optional T+0 settlement cycle for trades conducted until 1:30 p.m. Settlement of funds and securities will occur on the same day by 4:30 p.m.
- Phase 2: Proposes an optional immediate trade-by-trade settlement. Trading hours will extend until 3:30 p.m. Upon the completion of phase 2, the optional T+0 settlement under phase 1 will cease.
Identifiers and Operational Details:
- Identifiers: T+0 settled securities will be denoted by the series ‘T0’, with settlement indicated as ‘0’ in the security master.
- Non-Trading Days: Trading in T+0 settled securities will not occur on the ex-date of any corporate action, index rebalancing day of the corresponding T+1 settled security, or on settlement holidays.
All eligible members in the capital market segment can partake in trading T+0 settled securities. However, a separate trade report for T+0 trades cannot be downloaded. Instead, details will be available within existing reports downloaded by members.
Trades conducted under T+0 settlement are eligible for bulk reporting. Once executed under T+0, the settlement type cannot be changed, emphasizing the importance of accurate trade execution and settlement management.
The introduction of T+0 settlement signifies a major stride towards enhancing market efficiency and reducing settlement risks.
