T+0 Settlement by March 2024, Instantaneous Settlement in 2025: A Game-Changer
In a groundbreaking announcement, SEBI Chief Madhabi Puri Buch unveiled on November 25 a comprehensive roadmap for transforming the settlement landscape in India. The plan involves achieving same-day settlement, known as T+0, by March 2024, followed by the introduction of an optional parallel system for instantaneous settlement in 2025. T+0 Settlement
Transition from T+1 to T+0: The transition from the current T+1 settlement, where trades are settled the next business day, to T+0 marks a significant leap in the efficiency of the Indian financial markets. This move aligns with the global trend towards reducing settlement times.
Market Participants' Feedback: SEBI Chief Buch highlighted the collaborative effort involving market infrastructure and brokers in formulating the roadmap. The consensus is that the transition should not involve an interim one-hour delay but should seamlessly progress from T+0 to instantaneous settlement.
Challenges and Solutions: Despite the positive momentum, challenges exist. The article delves into the specific challenges faced during this transition and the proposed solutions to ensure a smooth shift to T+0 settlement.
Roadmap Overview:
A well-defined roadmap has been devised for the same-day settlement of trades by March 2024. An optional parallel system for instantaneous settlement is set to follow.
Technological Emphasis:
Market infrastructure and brokers stress the need for a direct move from T+0 to instantaneous settlement, avoiding an interim one-hour delay.
Progress and Satisfaction:
SEBI Chief expressed satisfaction with the progress, stating that extensive discussions have taken place. The parallel system is entirely optional, providing flexibility for market participants.
Timeline and Transition:
Commencing with T+0 settlement is planned by the end of March. Instantaneous settlement is expected to be implemented a year after the initiation of T+0 settlement.
Previous Settlement Transition:
India transitioned to T+1 settlement (next business day) in January of the current year.
Investor Concerns:
Initial reports suggested resistance from offshore investors due to concerns about a potentially fragmented system and increased trading costs. The same-day settlement requires foreign investors to convert funds into Indian rupees a day before the trade, contrasting with T+1 and T+2 settlements where rupees can be obtained on the settlement day. Join our WhatsApp Group for Trading/Investment ideas & Market Updates👇
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in the stock market is subject to unpredictable market-related risks. The author has no plans to invest in this offer and also the author does not recommend investing in any offer published on this website.