SEBI Proposes T+0 Instant Settlement on Alternative Basis for Equity Cash Segment

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Mumbai: Capital market regulator SEBI has proposed to implement T Plus Zero i.e. settlement on the same day as an alternative basis in the stock markets so that investors can now trade in stocks and get the money deposited in the stock account immediately. Securities and Exchange Board of of India (SEBI) has proposed to introduce this T Plus Zero (same day) settlement for trades in the equity cash segment on Friday. At present T Plus One settlement cycle is applicable in stock markets, instead of this, it is proposed to make the settlement effective on the day of trade.

In the T Plus One system, the settlement of shares and funds takes place on the day after the day the shares are traded, this T Plus One was implemented from January 2023. Sebi has said that the implementation of this immediate system of settlement of shares and funds will eliminate the risk of settlement shortfall of both. This will reduce the risk exposure of the clearing corporation and also eliminate the risk to the market participants.

SEBI has suggested introducing this proposed shorter settlement cycle in two phases in a consultation paper released on Friday. In which T Plus zero settlement cycle will be implemented in the first phase. The settlement of funds and securities in the stocks trades done till 1:30 pm will be completed by 4:30 pm on the same day. While in the second phase, it is proposed to introduce trade-by-trade instant settlement of trades done by 3:30 pm on an optional basis. Sebi has further said that the alternative T Plus zero settlement system implemented under the first phase will be discontinued once the instant alternative settlement is implemented.

Investors who settle their trades through custodians will be excluded for same day T Plus zero settlement. These investors will include institutional investors, special foreign funds, brokers said. However, in real-time settlement, all investors who settle trades through custodians will also be able to settle for this.

Sebi has said that considering the time required for processing custodial trades and the limited time available for settlement and they are currently exempted from margin requirements, it is proposed to exclude custodian customers in the first phase. Sebi has further said that T Plus will introduce separate scrip code exchanges for zero. Along with this, it is proposed to introduce a one percent price band for the shares between the two settlements.

A price band will be inserted between the two segments (T plus zero or immediate settlement cycle and T plus one settlement cycle) for the same share-scrip so that there is no issue of price difference between the two segments. So that the price fluctuations between the T Plus One settlement cycle and the T Plus zero settlement cycle are limited, Sebi has said. Sebi says that the trading session in this instant settlement-same day settlement segment will be one continuous session from 9:15 am to 1:30 pm and there will be no pre-open or block or even post-close sessions.


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