The Securities and Exchange Board of India (SEBI) has taken a groundbreaking step in the Indian securities market by introducing the T+0 settlement cycle, a global first. In a recent speech at the CII Corporate Governance Summit, Madhabi Puri Buch, the first woman chief of SEBI, highlighted India’s shift from sitting in the last row to the center stage of global forums. This move signifies India’s leadership and expertise in financial innovation.
The T+0 settlement cycle involves the shares or sale proceeds of the shares being credited to the demat or bank account on the same day of the transaction. This is a significant shift from the traditional T+1 cycle, where the credit occurs the day after the transaction. The implementation of T+0 will bring immediate benefits to investors, including enhanced liquidity and reduced costs.
On the first day of the T+0 launch, 63 members participated in the optional segment on BSE, with 41 trading in shares of 10 companies. A total of 49 unique investors utilized the facility, signaling a positive reception to the new settlement cycle. Industry experts like Shrey Jain, founder of SAS Online, and Vamsi Krishna, CEO of StoxBox, believe that T+0 will lead to a more efficient and dynamic market ecosystem.
The move towards T+0 is part of SEBI’s larger goal of moving towards instant settlement. By reducing the settlement cycle, SEBI aims to improve market efficiency, transparency, and risk management. The regulator has already noted a significant improvement in the settlement defect rate after implementing T+1, showcasing the benefits of shorter settlement cycles.
Retail investors are expected to be the primary beneficiaries of T+0, as it allows for immediate liquidity and optimal fund utilization. Prashanth Tapse, Senior VP of Mehta Equities, believes that T+0 will revolutionize the trading landscape for small investors, reducing risk exposure and offering same-day access to funds and securities.
Overall, the introduction of the T+0 settlement cycle marks a significant milestone in the Indian capital markets, signaling a shift towards enhanced efficiency and transparency. As SEBI aims to strengthen risk management and improve market operations, the move towards instant settlement holds promise for all stakeholders in the Indian securities market.
