Securities and Exchanges Board of India on March 21, 2024, issued a framework for the introduction of the Beta version of the T+0 settlement cycle on an optional basis in addition to the existing T+1 settlement cycle in the equity cash market, for a limited set of 25 scrips and with a limited number of brokers. The new framework will become operational by March 28, 2024. The T+0 settlement cycle means funds and securities for trade are settled on the same day it is executed. Currently, in the T+1 settlement, there is a one-day lag in depositing stocks and funds into a trader's account. Sebi circular said that this shortened settlement cycle will bring cost and time efficiency, transparency in charges to investors, and strengthen risk management at clearing corporations, and the overall securities market ecosystem. On a periodic basis, MIIs are asked to disseminate the list of brokers that are participating in the Beta version of the T+0 settlement cycle on their websites.
The technological advancements, architecture and capacity of MIIs, present opportunities for further advancing clearing and settlement timelines from the T+1 settlement cycle, Sebi said. Further India’s depository ecosystem has visibility of individual client-level holdings in digital form which enables immediate transfer of securities, Sebi put forth the rationale. Further, the payments and settlements ecosystem in India allows real-time fund transfers.
All investors are eligible to participate in the segment for the T+0 settlement cycle if they are able to meet the timelines, process and risk requirements as prescribed by the MIIs.
The surveillance measures as applicable in the T+1 settlement cycle shall be applicable to scrips in the T+0 settlement cycles. Trade Timings will be one continuous trading session from 09:15 AM to 1:30 PM. The price in the T+0 segments will operate with a price band of +100 basis points from the price in the regular T+1 market. This band will be re-calibrated after every 50 basis points movement in the underlying T+1 market.
The prices of securities traded in the T+0 segment will not be considered in the calculation of market indexes, or computing settlement prices. There shall be no separate close price for securities based on trading in T+0 segments.
Further, there shall be no netting in pay-in and pay-out obligations between the T+1 and T+0 settlement cycle. These rules aim to make sure transactions in the T+0 cycles do not get mixed with those in the T+1 cycle for settlement purposes.
Sebi had initially proposed a T+O settlement for the top 500 listed equity shares based on market capitalization but deferred the project for six months until the results of the Beta version trial.
