Recently, the Securities and Exchange Board of India (SEBI) proposed to introduce an optional T+0 (same day) and instantaneous settlement of trades in the equity cash segment.
- The shorter settlement cycle will be available alongside the existing T+1 cycle.
- In the T+1 settlement system, stocks and funds are settled by the next day of the trade. This was implemented in January 2023.
- As per Sebi, an instant settlement mechanism enables instant receipt of funds and securities and eliminates the risk of settlement shortages, since both funds and securities will be required to be available before placing the order.
- It also eliminates the risk for market participants and and reduces the risk exposure of Clearing Corporations (CCs).
