SEBI to Introduce Same-Day Trade Settlement by March ’24
Depository Receipts- SEBI

Markets regulator the Securities and Exchange Board of India (SEBI) is set to introduce T+0 or same-day settlement of trades by March 2024. 

SEBI, in its consultation over instantaneous settlement, discovered that market participations looked forward to switching to T+0 settlement directly, citing cost and technology issues. 

After the market moves to T+0, the regulator will take one year to move to instantaneous settlement. 

The T+0 settlement process will be a parallel process and optional, which will be applicable to non-custodian or non-institutional clients. Also, the trade settlement will be based on T+1 closing prices.

The country transitioned to T+1 settlement, where trades are settled the next business day, in January 2023.

It was reported earlier that the market regulator’s plan to opt for the settlement of equity market trades within the same day was facing pushback from offshore investors who fear it will lead to a fragmented system besides adding to the cost of trading.

For transaction and settlement of a trade within the same day, a foreign investor would be required to convert funds into Indian rupees a day before the trade. However, in T+1 and T+2, rupees can be obtained on the settlement day.

In addition, the markets regulator approved a host of measures at its recent board meeting. For social stock exchanges, it cut the minimum issue size in case of public issuances of zero-coupon zero-principal instruments from Rs 1 crore to Rs 50 lakh and the minimum application size from Rs 2 lakh to Rs 10,000.

It also gave a go-ahead to the framework for registration of index providers to license ‘significant indices’ notified by SEBI. Further, it amended the REIT regulations for facilitating small and medium REITs — with an asset value of Rs 50 crore instead of Rs 500 crore.

Lastly, the board gave a green signal to proposals to amend Alternative Investment Fund (AIF) regulations. As per this, after September 2024, fresh investments into AIFs shall be held in the dematerialised form.

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