SEBI nod to T+0 settlement beta version rollout from March 28: Here’s how traders will benefit

The Securities and Exchange Board of India (SEBI) has approved the launch of the beta version of the T+0 settlement on an optional basis from March 28. This decision was taken at a board meeting on Friday, March 15.

The new T+0 settlement rollout marks a departure from the current T+1 settlement period, which refers to the settlement of transactions on the following business day.

SEBI has decided to begin implementing the T+0 settlement, which means settlement of transactions on the same day, for a limited number of scrips and brokers. During the beta phase, the regulator intends to gather feedback from stakeholders in order to build a robust framework around the new T+0 regime.

In a statement dated March 15, SEBI said, “Taking into account stakeholder feedback, the Board approved the launch of a Beta version of optional T+0 settlement, for a limited set of 25 scrips, and with a limited set of brokers. In parallel, SEBI shall continue to do further stakeholder consultation, including with the users of the Beta version. The Board shall review the progress at the end of three months and six months from the date of this implementation, and decide on further course of action.”

SEBI will evaluate the progress of the T+0 settlement after three and six months from its implementation date to determine the next steps.

What is the T+0 settlement?

Under the T+0 settlement regime, trades executed on a given day are settled on the same day, allowing for real-time settlement. This is a departure from the T+1 settlement cycle that Indian markets have followed since 2021. Under the T+1 cycle, funds and securities for a transaction are settled on the next business day. The T+0 settlement cycle will now be available as an alternative to the T+1 cycle. The T+1 cycle was fully implemented from January 2023.

SEBI reduced the settlement cycle to T+3 from T+5 in 2002, then to T+2 in 2003, before adopting T+1 in 2021 and executing it in stages, with the last phase being completed in January 2023. Shorter settlement cycles are expected to reduce counterparty risk while increasing liquidity in the market.

This apart, SEBI also approved measures to bring flexibility for Initial Public Offerings (IPOs), Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).

T+0 settlement rollout: Expected benefits for traders

The launch of the T+0 settlement regime will help improve the efficiency and increase liquidity in the broader markets. This will also be beneficial for traders and brokers with more margins and a reduction of time lag between the execution of trades and settlement. The investors will be able to get faster payouts.