SEBI Aims Same Day Settlement Trade by March 2024: Madhabi Puri Buch
India’s capital markets regulator, Securities and Exchange Board of India (SEBI), is gearing up to implement same-day settlement of trades on stock exchanges, known as T plus zero (T+0) settlement, by the end of the 2023-24 financial year. Madhabi Puri Buch, Chairperson of SEBI, made this announcement during the Global Economic Policy Forum held at Delhi’s Bharat Mandapam.
Streamlining Trade Settlements
Currently, trades in India are settled in “T+1,” which means settlements occur one day after the trades are initiated. However, with T+0 settlement, trades will be settled on the same day, ensuring instant settlements.
Roadmap for Implementation
SEBI has previously addressed the prospect of T+0 settlement. Buch stated that SEBI intends to establish the T+0 settlement norm by the end of March 2024, followed by the implementation of instantaneous settlement twelve months thereafter. This roadmap forms the foundation for the transition towards more efficient trade settlements in India.
Technological Advancements and Solutions
Buch highlighted the significance of technology, co-creation, and trust in addressing the challenges associated with T+1 settlements. She mentioned the possibility of the Introduction of Application Supported by Blocked Amount (ASBA) for the secondary market, which would allow funds to remain in the account until the trade occurs, earning a 4 percent yield.
India’s Leading Role in Settlement Efficiency
India is on track to become the second country, after China, to adopt a short settlement cycle of just one day. In most major economies, trade settlements typically take two days. This move positions India as a pioneer in settlement efficiency on a global scale.
Boosting Government Resources and Investor Interest
Buch acknowledged the efforts of the Indian government and the Reserve Bank of India (RBI) in their pursuit of efficient settlement systems. She emphasized that the inclusion of Indian sovereign bonds in global indices holds immense importance for the country, providing the government with opportunities to raise resources. Additionally, once the Indian yield curve gains recognition in the international market, the corporate bond market is expected to attract substantial investments from global players.
Embracing Automation and Technological Innovations
Buch discussed SEBI’s commitment to automation and technology in decision-making processes. With a focus on compliance and supervisory technology, SEBI aims to streamline operations and reporting through the use of advanced algorithms. These advancements, including increased XBRL reporting and automated supervision, will enhance efficiency and transparency within the market.
Conclusion
SEBI’s ambitious plan for T+0 settlement trade by the end of March 2024 signifies a major leap towards enhanced trade settlement efficiency in India. With a clear roadmap and the adoption of advanced technologies, SEBI aims to establish India as a frontrunner in global capital markets. These developments will not only benefit investors and traders but will also provide the government with increased resources and attract global investors to the Indian corporate bond market.
Disclaimer:
The material in this article was compiled using the most recent Acts, Rules, Circulars, Notifications, Provisions, Press Releases, and material applicable at the time. The completeness and correctness of the material ensured with due diligence. It is required of users of this material to consult the relevant, applicable legislation. The data given may change without prior notice and does not constitute professional advice. As a result, Estabizz Fintech disclaims all liability for the results of using such material.
