How will T+0 settlement benefit investors and traders? SEBI to roll out beta feature on March 28

Indian markets have been following a T+1 settlement cycle since 2021

The beta version will be limited to a set of 25 scrips initially with a limited number of brokers The beta version will be limited to a set of 25 scrips initially with a limited number of brokers

Update: Here is the list of 25 stocks eligible for T+0 settlement cycle from March 28

SEBI has launched the beta version of the T+0 settlement cycle for investors and the feature will go live from March 28.

The new T+1 regime will be available as an option alongside the existing T+1 settlement cycle. The beta version will be limited to a set of 25 scrips initially with a limited number of brokers.

The market regulator will continue to deliberate with the stakeholders, including the beta users, following which it will decide on future course of action based on three-month and six-month reviews.

What is T+0 settlement?

In case of T+0 settlements, the trades taking place on each trading day will be required to be settled on the same day. 

Indian markets have been following a T+1 settlement cycle since 2021 and under this, funds and securites for a transaction will be settled on following business day. Introduced in phases, the T+1 settlement was fully implemented in January 2023.

The original T+5 cycle was shortened to T+3 in 2002 and to T+2 in 2003.

How will T+0 benefit investors?

  • Improve market efficiency
  • Boost liquidity in markerts
  • Free up the margins¬†
  • Reduce time lag between trade execution and settlement
  • Instant receipts and quicker payouts give investors more control over funds
  • Reduce the risk of settlement shortages in case of default or delay
  • Faster fund payouts against securities to sellers and faster security payouts against funds to buyers

SEBI has also approved measures to bring flexibility for Initial Public Offerings (IPOs), Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).

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