The Securities and Exchange Board of India (Sebi) is set to introduce a beta version of the T+0 settlement cycle starting March 28.
This system will allow trades to be settled on the same day they are made, meaning sellers will receive payment immediately, unlike the current T+1 settlement system where payment is received the next day.
The beta launch, approved by Sebi on March 15, will initially include 25 stocks and a limited number of brokers. Under this system, prices in the T+0 settlement cycle will operate within a band of plus or minus 100 basis points (or one percentage point) from the prices in the regular T+1 market.
“Pursuant to deliberations and approval of the Board, it has been decided to put in place a framework for introduction of the Beta version of T+0 settlement cycle on optional basis in addition to the existing T+1 settlement cycle in equity cash market, for a limited set of 25 scrips and with a limited number of brokers,” Sebi said in its circular.
This band will be adjusted after every 50 basis points movement in the T+1 market.
All investors will be eligible to participate in the T+0 settlement cycle as long as they can meet the timelines, processes, and risk requirements set by the Market Infrastructure Institutions (MIIs).
Surveillance measures applicable in the T+1 settlement cycle will also apply to stocks in the T+0 settlement cycle.
Trading in the T+0 segment will occur in one continuous session from 9:15 AM to 1:30 PM.
However, T+0 prices will not be considered in index calculation and settlement price computation, and there will be no separate closing price for securities based on trading in the T+0 segment.
Additionally, there will be no netting of obligations between the T+1 and T+0 settlement cycles. This move by Sebi aims to streamline and expedite the settlement process, providing greater flexibility and efficiency for market participants.