Revolutionizing Trade Settlements: SEBI’s Bold Move to T+0 by March 2024

SEBI

In a groundbreaking announcement on November 25, SEBI Chief Madhabi Puri Buch revealed a strategic plan for the seamless settlement of trades within the same day, with a vision to implement T+0 settlement by March 2024. This visionary move is set to redefine market dynamics, offering not just efficiency but a potential paradigm shift.

Embracing T+0: A Pioneering Leap

Market participants have voiced a unanimous sentiment that commencing the journey at T+0 is imperative before transitioning to instantaneous settlement. Buch, in her address following SEBI’s Board meeting in Mumbai, shed light on the meticulous roadmap that has been crafted to achieve this ambitious goal.

Technological Advancements Paving the Way

To facilitate instantaneous settlement, market infrastructure and brokers underscored the necessity for a technological path. Crucially, this path shouldn’t involve a mere interim step with a one-hour delay. Instead, the proposed trajectory is a direct leap from T+0 to instantaneous settlement.

Buch expressed her satisfaction with the progress, emphasizing the extensive discussions that have taken place. The roadmap, she affirmed, is near completion, presenting a parallel system that is entirely optional for market participants.

A Timeline for Transformation

Addressing the intricate details of this transformative plan, Buch elaborated, “Market participants have communicated the need to commence with T+0 and progress to instantaneous settlement. The targeted timeline is T+0 settlement by the end of March 2024, with instantaneous settlement slated for implementation a year thereafter.”

India, having transitioned to T+1 settlement in January of the current year, stands on the precipice of a monumental shift in its settlement system.

Overcoming Challenges: A Balancing Act

Earlier reports hinted at resistance from offshore investors, apprehensive about potential drawbacks such as a fragmented system and increased trading costs. SEBI’s initiative to allow same-day settlement faced pushback, with concerns raised about the logistical complexities for foreign investors.

To execute a trade and settle it within the same day, a foreign investor would need to convert funds into Indian rupees a day before the trade. This contrasts with the existing T+1 and T+2 settlements, where rupees can be acquired on the day of settlement.

Conclusion: SEBI’s Vision Unveils New Horizons

As SEBI charts the course for this revolutionary shift in trade settlements, the financial landscape of India stands poised for transformative change. The commitment to T+0 settlement by March 2024, followed by an optional instantaneous settlement system, reflects a bold stride towards efficiency, transparency, and a future-ready market ecosystem.

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