Sebi Plans Same-Day Trade Settlement by March 2024

Mumbai, Nov 25 (PTI) Capital markets regulator Sebi aims to introduce same-day settlement of trades on stock exchanges by March 2024 and eventually have real time settlement, its Chairperson Madhabi Puri Buch said on Saturday.

Already, the watchdog reduced the settlement timelines to as short as one day.

"Sebi wants the T plus zero (T+0) settlement norm to be in place from March-end 2024 and T plus instantaneous settlement 12 months from thereon," Buch told reporters here after the regulator's board meeting.

T+0 refers to the same-day settlement of trades and instantaneous settlement means settling the transactions on a real time basis.

According to Buch, market markers are of the view that it makes better sense to move directly from T+1 hour to T+instantaneous as there is no benefit to be drawn from the middle ground which is T+0.

The investment banker-turned-regulator said that Sebi is "fully open" to the suggestions made by the market makers on instantaneous settlement of trades.

She said that the new settlement will be parallel to the existing settlement system and will fully be optional.

Moreover, it will be available on select large products, and even that will be optional to choose from.

The country's stock markets moved to T+1 settlement, where trades are settled the next business day, in January this year. Earlier, it was T+2 system.

The changes from T+2 to T+1 and T+ 1 hour have been eventless from an infrastructure point of view, she added.

Sebi's plans hinge on the success of the newly introduced Application supported by the locked amount (Asba) for secondary market transactions.

Earlier, concerns were raised by certain foreign portfolio investors on the shortening of the settlement cycles citing forex-related worries.

In July, the chairperson announced that Sebi was aiming to introduce instantaneous settlement of trades on the stock exchanges by next fiscal.

Later, in September, Sebi official said the regulator will introduce one-hour trade settlements by the end of this fiscal, in the run-up to making such processes instantaneous.