BSE managing director and chief executive officer Ashishkumar Chauhan
The T+1 (trade plus 1 day) settlement cycle, considered to be shorter and more flexible, is bound to be implemented from next year even if there would be some resistance from the market, Bombay Stock Exchange (BSE) CEO and MD Ashishkumar Chauhan said on September 28.
Regulators across the world have developed an understanding that the T+1 cycle is feasible, Chauhan told Bloomberg Quint, adding it is a larger milestone undertaken together by the global regulators.
"For me, the regulators have a perspective, they jointly decided across the world what needs to be done. They pace it in some practical way," he was quoted as saying.
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Chauhan's remarks come days after the Securities and Exchange Board of India (SEBI) said the bourses can allow the already existing T+2 rolling settlement cycles or the shorter T+1 cycle from January 1, 2022, onwards.
However, a sector of the market participants has indicated reluctance to switch to the T+1 cycle.
According to the CEO of BSE - Asia's oldest exchange - the time has come for T+1 as it is being adopted by the biggest markets around the world, including the United States.
“In fact, the U.S. is pushing for T+1, many other countries are also trying for T+1. That’s why even SEBI is trying to do T+1. So if not today, tomorrow India will have to participate in that kind of flow," Chouhan was quoted as saying.
Notably, SEBI Chairman Ajay Tyagi on September 16 had stressed that the T+1 settlement cycle is in the interest of all market participants.
"T+3 settlement cycle started in 2003, lots of advances in technology since then, T+1 ensures you get funds in a quicker manner. There is a need to further reduce settlement time to ensure margin being kept for less time," he had said.
The market regulator had on September 7 introduced the T+1 rolling settlement cycle for stocks on an optional basis. The regulatory change was adopted after the market regulator received requests from various stakeholders to further shorten the settlement cycle.
"Based on discussions with Market Infrastructure Institutions (Stock Exchanges, Clearing Corporations and Depositories), it has been decided to provide flexibility to Stock Exchanges to offer either T+1 or T+2 settlement cycle," SEBI had stated in its circular.