Sebi Launches T+0 Settlement Beta Version; What Is It?

Sebi launched the beta version of the T+0 settlement for 25 shares and will wait to implement the T+O settlement for the 500 largest companies till beta results come.

Securities and Exchange Board of India (Sebi) On March 15 at its board meeting announced an optional settlement cycle, launching the Beta version of optional T+0 settlement. Taking into account stakeholder feedback, the Board approved the launch of a Beta version of optional T+0 settlement, for a limited set of 25 shares, and with a limited set of brokers. "In parallel, SEBI shall continue to do further stakeholder consultation, including with the users of the Beta version. The Board shall review the progress at the end of three months and six months from the date of this implementation, and decide on further course of action," the market regulator said.

T+0 settlement means that the funds and securities for trade are settled on the day it is executed.

Sebi's T+0 or Instant Trade Settlement Plan

In December 2023, Sebi proposed the instant settlement of trades (T+0) alongside the existing T+1 settlement cycle. The move sought to boost liquidity for domestic retail investors because they would receive trade proceeds instantly instead of the current T+1 settlement, where there is a one-day lag in depositing stocks and funds into a trader's account. Sebi reasoned that it would free up capital, enhance market efficiency, and enhance overall risk management for clearing corporations (CCs).

In the first phase, Sebi planned to introduce an optional T+0 settlement cycle, allowing trades until 1:30 PM, with funds and securities settled by 4:30 PM on the same day.

The second phase will have an optional immediate trade-by-trade settlement, with trading permitted until 3:30 PM.

Sebi had then proposed starting with a T+0 settlement for the top 500 listed equity shares based on market capitalisation. But now it has deferred the project for six more months till the result of the beta trial comes out.

Other Decisions Taken At The Sebi Board Meeting

The Board also approved a framework for the issuance of subordinate units by privately placed InvITs only to start with. The framework will enable the issuance of subordinate units which is essential to bridge the valuation gaps that may arise as a result of the difference in the valuation of an asset assessed by the Sponsor (in its capacity of the asset seller) and the InvIT (in the capacity of the asset buyer). The framework is designed to also include risk mitigation measures in respect of such units.

Sebi approved amendments to its regulations to enhance the ease of conducting initial public offerings (IPOs) for companies. It eliminated the one per cent security deposit requirement for equity share issues. Further to facilitate ease of doing business for listed entities, the Board said that market capitalization-based compliance requirements for listed entities will now be determined based on average market capitalization of six months ending December 31, instead of single day’s (March 31) market capitalisation.

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