The Securities and Exchange Board of India (SEBI) on Tuesday issued a circular to widen the scope of optional T+0 rolling settlement cycle in equity cash market.
Optional T+0 settlement cycle will be made available to top 500 scrips in terms of market cap as on December 31. The scrips shall be made available for trading and settlement starting with scrips at bottom 100 companies and include the next bottom 100 companies every month till top 500 companies are available for trading. This is in addition to the 25 scrips already available for trading.
Qualified stock brokers and market Infrastructure Institutions will put in place systems and processes for enabling seamless participation of investors in optional T+0 settlement cycle.
The above measures will become applicable from January 31, 2025.
Block deal mechanism
A mechanism for Block Deal window will be put in place by the Stock Exchanges under the optional T+0 settlement cycle. The Block Deal window under the optional T+0 settlement cycle shall be available only for the morning session during 8:45 am to 9:00 am in addition to the existing Block Deal windows of 8:45 am to 9:00 am and 2:05 pm to 2:20 pm for T+1 settlement cycle. The trades in optional T+0 block window session will be settled on T+0 settlement cycle. Participation under this window shall be optional for the investors.
“The move will make India as one of the fastest settlement markets in the world. The phasewise implementation will give adequate time for market infrastructure systems to be ready for a smooth implementation,” said Kranthi Bathini, Director – Equity Strategy, Wealthmills Securities.
Exchanges had rolled out the beta version of T+0 from March 28 for retail clients. T+0 facilitates quicker receipt of funds and securities in investor accounts, reducing the risks associated with the time lag.
Restricted activity
Market observers said the beta version of T+0 has not taken off, with few brokers offering the settlement facility. Activity so far has been restricted to token trades, resulting in low volumes. Some feel that systems are not yet in place for smooth operations.
The same-day settlement is in addition to the existing T+1 settlement cycle currently in play and will be a precursor to instant settlement that may be rolled out on an optional basis at a later date.
Pointers
Optional T+0 settlement cycle will be made available to top 500 scrips by market cap as on December 31
Phase-wise implementation starting with bottom 100 companies
100 firms will be added every month till top 500 companies are available for trading
This is in addition to the 25 scrips already available for trading
