Stock Market T0 Settlement: SEBI Lays Detailed Guidelines for beta version; Check Details. Image Soure: Canva
The Securities and Exchange Board of India (Sebi) has implemented a new framework on Thursday, introducing the beta version of the T+0 trade settlement cycle on an optional basis. Initially, this option will be accessible for a select group of 25 stocks and a limited number of brokers.
This initiative is an addition to the existing T+1 settlement cycle in the equity cash market. According to a circular issued by Sebi, the new framework will take effect from March 28. Sebi stated, “Following discussions and approval from the Board, a framework has been established to introduce the Beta version of the T+0 settlement cycle on an optional basis alongside the existing T+1 settlement cycle in the equity cash market. This will initially involve a limited set of 25 stocks and a restricted number of brokers.”
Moreover, Sebi emphasized that a shortened settlement cycle would enhance cost and time efficiency, bring transparency in charges to investors, and bolster risk management at clearing corporations and across the securities market ecosystem. Under the T+0 cycle, settlements would occur on the same day as the trade.
Sebi has consistently adapted to evolving market dynamics and fulfilled its mandate of fostering the development of securities markets and safeguarding investor interests. The regulator previously reduced the settlement cycle to T+3 from T+5 in 2002, and subsequently to T+2 in 2003.
Regarding eligibility, Sebi clarified that all investors would be eligible to participate in the T+0 settlement cycle if they meet the prescribed timelines, processes, and risk requirements set by market infrastructure institutions. Trading will be permitted between 9.15 am and 1.30 pm.
The price in the T+0 segment 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 surveillance measures as applicable in the T+1 settlement cycle shall be applicable to scrips in the T+0 settlement cycle.
The regulator said that T+0 prices will not be considered in index calculation and settlement price computation. There will be no separate close price for securities based on trading in the T+0 segment.
To ensure smooth implementation, the Market Infrastructure Institutions (MIIs) will publish other operational guidelines, including mechanism for trading, clearing and settlement, risk management etc and Frequently Asked Questions (FAQs) along with the list of 25 scrips for the Beta version of T+0 settlement cycle and disseminate the same on their respective websites.
(PTI Inputs)
