The Securities and Exchange Board of India on Monday approved the expansion of the same-day settlement option for equity trades, including block deals, but refrained from allowing optional instantaneous settlement.
The number of scrips eligible for trading under the optional T+0 settlement will be increased in a phased manner from the 25 to top 500 in terms of market capitalisation, the SEBI said.
It refers to the process of settling trades on the same day, which means that the seller of stocks will receive money on the day of sale instead of the earlier T+1.
The shortened settlement cycle is expected to bring cost and time efficiency, transparency in charges to investors and strengthen risk management at clearing corporations.
The initiative was first approved in March and launched in a beta version on the exchanges.
All registered brokers can offer access to the optional T+0 settlement cycle to their investors and are free to charge differential brokerage for the same.
An optional block deal window mechanism will be introduced under T+0 settlement cycle during the 8:45 a.m. to 9:00 a.m. session, alongside the existing block windows under T+1 settlement cycle. Block deals are a kind of market transactions used to transact large volumes in the stock market.
SEBI said the earlier proposal to move from optional T+0 settlement to optional instantaneous settlement is not under consideration for now.
The market regulator has instructed brokers designated as Qualified Stock Brokers (QSBs) and all custodians to put in place systems to enable seamless participation of their clients in the optional T+0 settlement cycle.
"Appropriate time for implementation will be provided to such QSBs and custodians based on consultations with all stakeholders," the market regulator said.
Foreign portfolio investors and mutual funds will also be able to access the optional T+0 settlement cycle, the SEBI said.
The Board also reiterated that optional same-day settlement in the equity cash market will continue to coexist with the current T+1 settlement cycle.
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