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SEBI To Roll Out Instant Settlement of Trades

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The SEBI Chairperson Ms. Madhabi Puri Buch, has unveiled plans to introduce a real-time settlement system (T+0) for transactions on India’s stock exchanges. In addition to this, Ms. Buch mentioned that there are plans to launch a trading facility similar to the Application Supported by Blocked Amount (“ASBA”) for the secondary market, with an anticipated release date in January 2024.

This announcement follows SEBI’s recent reduction of the settlement cycle from T+2 to T+1, which was implemented in India in January 2023. The T+1 settlement cycle ensures that trade-related settlements are completed within 24 hours of the actual transactions taking place.

Trade settlement is a crucial process in the financial markets, involving the exchange of securities (such as stocks, bonds, or other financial instruments) and funds between parties involved in a trade. It represents the final step in a securities transaction, ensuring that both the buyer and the seller fulfill their respective obligations as per the trade’s terms. The settlement is deemed complete when the buyer receives the purchased securities and the seller receives the corresponding consideration.

The SEBI Chairperson also emphasized that the realization of real-time trade settlement (T+0), allowing for same-day settlements, will rely on the utilization of the Unified Payments Interface (UPI), online depositories, and advanced technological infrastructure. These changes are expected to be implemented by the end of 2024.

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