The Securities and Exchange Board of India (SEBI) on Tuesday issued a circular to broaden the scope of the optional T+0 rolling settlement cycle in the stock market.
The optional T+0 settlement cycle will be made available to the top 500 scrips in terms of market capitalization on December 31. The scrips will be made available for trading and settlement, starting with scrips at the bottom 100 companies and covering the next bottom 100 companies every month until the top 500 companies are available for trading. This is in addition to the 25 scrips already available for trading.
Qualified stockbrokers and market infrastructure institutions will establish systems and processes to enable seamless investor participation in the optional T+0 settlement cycle.
The above measures will apply from January 31, 2025.
Block deal mechanism
A Block Deal window mechanism will be introduced by the exchanges under the optional T+0 settlement cycle. The Block Deal window under the optional T+0 settlement cycle is only available for the morning session from 8:45 AM to 9:00 AM, in addition to the existing Block Deal windows of 8:45 AM to 9:00 AM and 2:50 PM to 2:20 PM for T+ 1 billing cycle. The transactions in an optional T+0 block window session are settled on the T+0 settlement cycle. Participation under this window is optional for the investors.
“This move will make India one of the fastest settlement markets in the world. The phased implementation will give market infrastructure systems sufficient time to be ready for a smooth implementation,” said Kranthi Bathini, Director, Equity Strategy, Wealthmills Securities.
Exchanges had rolled out the beta version of T+0 for retail customers from March 28. T+0 allows faster receipt of funds and securities into investor accounts, reducing risks associated with delay.
Limited activity
Market observers said the beta version of T+0 has not yet taken off and few brokers are offering the settlement facility. Activity has so far been limited to token transactions, resulting in low volumes. Some believe that systems are not yet in place for smooth business operations.
The same-day settlement will complement the existing T+1 settlement cycle currently in place and will be a precursor to instant settlement that can be rolled out on an optional basis at a later date.
Pointers
Optional T+0 settlement cycle will be made available on December 31 for the top 500 scrips by market cap
Phased implementation, starting with the bottom 100 companies
100 companies will be added each month until the top 500 companies are available for trading
This is in addition to the 25 scrips already available for trading
