Optional T+0 settlement to start on 28 March, says SEBI chairperson Madhabi Puri Buch

T+0 settlement will provide an opportunity for investors to settle their stock market trades on the same day.

The Securities and Exchange Board of India (Sebi) will start the T+0 trade cycle settlement on an optional basis later this month, on March 28, chairperson Madhabi Puri Buch said on the sidelines of an AMFI event on March 11. T+0 would mean settlements on the same day.

Instant settlement would ensure trades are settled immediately. At present, the Indian stock market operates on a T+1 settlement cycle for all scrips.

Last year, Buch had said that SEBI wants the T+0 settlement norm to be in place from March-end 2024 and T plus instantaneous settlement 12 months from thereon.

India is set to become the second country after China to operate on a short settlement cycle of one day. In most other major economies, trade settlement is typically completed within two days.

Also Read | T+0 settlement by March 2024, instantaneous settlement in 2025, both to co exist: SEBI Chief

T+0 settlement in phases

In December last year, SEBI informed that it plans to implement T+0 settlement in phases. In Phase 1, an optional T+0 cycle will be implemented for trades taken till 1:30 pm. Then, the settlement of funds and securities is to be completed by 4:30 pm.

In Phase 2, there will be an optional instantaneous trade-to-trade settlement for both funds and securities. In this, trading will be done till 3:30 pm. After Phase 2 of optional instantaneous settlement is implemented, Phase 1 of optional T+0 will be discontinued.

To begin with, eligible securities for T+0 settlement will be the top 500 listed companies based on market capitalisation. They will be transitioned to the new settlement cycle in three tranches of 200, 200, and 100 from lowest to highest market cap.