The Securities and Exchange Board of India (SEBI) is preparing to introduce T 0 settlement trade by the end of March 2024, according to Madhabi Puri Buch, the chairperson of SEBI. This move is aimed at reducing settlement risk and enhancing market efficiency.
T 0 settlement refers to the settlement of trades that occur on the same day as the trade execution. Currently, in India, the settlement process takes two trading days, known as T+2 settlement. The introduction of T 0 settlement will enable investors to receive the proceeds of their trades on the same day, eliminating the need to wait for two days.
This move is expected to have several benefits for market participants. It will reduce counterparty risk as the settlement will happen on the same day, minimizing the chances of default. It will also provide greater liquidity to investors, as they will have access to their funds immediately after the trade is executed.
SEBI has been working on the implementation of T 0 settlement for some time now. The regulator has conducted extensive consultations with market participants and stakeholders to ensure a smooth transition. The necessary infrastructure and systems are being put in place to support the new settlement process.
While the introduction of T 0 settlement is a significant step towards enhancing market efficiency, it is crucial to ensure that the necessary safeguards are in place to prevent any potential risks. SEBI is committed to maintaining the integrity and stability of the Indian capital markets and will closely monitor the implementation of T 0 settlement to address any challenges that may arise.
In conclusion, the introduction of T 0 settlement by SEBI by the end of March 2024 is expected to bring about positive changes in the Indian capital markets. It will reduce settlement risk, provide greater liquidity, and enhance market efficiency, ultimately benefiting investors and market participants alike.