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Sebi's instant settlement plan faces foreign investor pushback

The concerns were raised in a meeting earlier this month, the people told Reuters, and have not been previously reported.

October 27, 2023 / 13:05 IST
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Sebi's instant settlement plan faces foreign investor pushback

India's plan to allow the settlement of equity market trades within the same day is facing pushback from offshore investors who fear it will lead to a fragmented system and add to the cost of trading, said two people with direct knowledge of the matter.

The concerns were raised in a meeting earlier this month, the people told Reuters, and have not been previously reported.

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India transitioned to T+1 settlement, where trades are settled within a day, in January. The Securities and Exchange Board of India (SEBI) now plans to allow instant settlement by October next year as an option running alongside T+1 settlement.

"Having two different settlement cycles risk fragmenting the liquidity of the market and may also increase systemic risk due to more failed trades," said Eugenie Shen, managing director at Asia Securities Industry and Financial Markets Association (ASIFMA), a lobbyist for offshore investors.