SEBI working on instant settlement of stock market transactions

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Public TV English
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NEW DELHI: Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch on Monday said the financial markets regulator is working on a mechanism for instant settlement of transactions on the stock exchanges.

“Certainly, one of the things that we think is not very far off, is even instantaneous settlements on the stock exchange”, Buch said in a press conference.

“We are working on that, we are engaged with the ecosystem and we believe that in the not very distant future, we will have a mechanism which will facilitate instantaneous settlement of transactions on the stock exchanges. That’s where we are headed”, she added.

In late January this year, India started following a market-wide Transaction+1 (T+1) settlement system for equities. Earlier, it was a T+2 cycle. The new T+1 system was first introduced by the market regulator Sebi in 2021 and has been implemented phase-wise starting from the smallest companies by market capitalisation to larger ones.

The T+1 system means that the transactions must be done within a day, or 24 hours, of the completion of a transaction. For example, under T+1, if an investor bought shares on Monday, the money will be credited to the customer’s demat account on Tuesday.

The instantaneous settlement, once it is implemented, will put money into the hands of the investors on a real-time basis.

Separately, SEBI’s Board last month approved the proposal for reducing the time period for listing of shares of a company through an Initial Public Offering (IPO) from the existing six days to three days, from the date of issue closure.

The revised timeline will be made applicable in two phases — voluntary for all public issues opening on or after September 01, 2023, and mandatory on or after December 01, 2023, SEBI had said. The regulator said the decision to halve the days follows extensive consultation with all stakeholders

Extensive stress testing has been done to confirm that the transition to T+3 will be smooth. The reduction in listing timeline is expected to benefit as issuers will receive their funds and allottees will receive their securities in a shorter time period.

Also, the subscribers who were not allotted shares will receive their money back quickly and the resources of all stakeholders — like stock exchanges, banks, depositories, brokers in the public issue process — will remain deployed in the market for a shorter period. (ANI)

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