What’s the update and what does the T+0 settlement cycle mean?
Mrs. Madhabi Puri Buch, Chairperson of SEBI, disclosed today (11th March, 2024) that the Securities and Exchange Board of India (SEBI) will introduce the T+0 settlement cycle for sale of scrips on an optional basis by March 28. As per news reports, trades executed by 1 pm will be settled on the same day itself.
What’s the current settlement cycle and what is its history?
Presently, India operates on the T+1 settlement cycle, meaning there is a one-business-day delay between executing a stock trade and its settlement. This cycle was introduced incrementally starting in 2021 and was fully implemented by January 2023, ensuring trades are settled the day after they occur.
Which countries have adopted the T+0 settlement cycle?
India is the second country, after China, to adopt a rapid settlement cycle of one day. In contrast, most other major global economies typically settle trades within a two-day period.
What are the implications of transitioning to T+0?
Moving to T+0 would enable trades to be settled on the same day, facilitating immediate trade settlements.
What are the next steps after the T+0 settlement cycle?
In November 2023, Puri mentioned that SEBI is devising a framework for this transition, while also contemplating an optional system for immediate settlement.
Useful links:
STRUCTURING INVESTMENTS VIA COMPULSORILY CONVERTIBLE DEBENTURES AND ITS ADVANTAGES OVER EQUITY INSTRUMENTS, Private Equity and Venture Capital: Concept and Indian Legal Framework, ESOPs: TREATMENT OF VESTED AND UNVESTED ESOPs UPON LIQUIDATION, Unified Securities Code
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