New Delhi: Capital market regulator Self President Ajay Tyagi It said on Thursday that the T+1 (trade plus one day) settlement cycle is in the interest of all market participants and the new system will not lead to liquidity fragmentation.
T+1 means that the settlement relating to market trade has to be approved within one day of the actual transaction taking place. Currently, trades on Indian stock exchanges are settled within two working days after the transaction (T+2).
“Early settlement will be good for all market participants. It is in everyone’s interest and the new system will not lead to liquidity fragmentation,” Tyagi said at an event organized by the Confederation of Indian Industry (CII).
This comes amid concerns raised by the brokers’ consortium over the implementation of the short settlement system.
NS Securities and Exchange Board The Government of India (SEBI) earlier this month allowed exchanges to go into the T+1 settlement cycle on an alternate basis.
As of now, SEBI has introduced this mechanism on an optional basis, so exchanges will decide whether to implement T+1 settlement or continue with the T+2 old mechanism. The new mechanism will come into effect from January 1, 2022.
This is not the first time that SEBI has decided to shorten the settlement cycle. Earlier in 2002, the capital markets regulator reduced the number of days in the settlement cycle from T+5 days to T+3 days, and then to T+2 days in 2003.
Tyagi said Indian markets are witnessing a boom in fundraising through Initial Public Offerings (IPOs).
During the last 18 months, growth oriented technology companies have raised around Rs 15,000 crore through IPOs. His filings with SEBI show a pipeline of around Rs 30,000 crore at present.
He said that the amount raised through IPO in the current financial year so far is almost equal to the amount raised in the entire financial year 2020-21, which was Rs 46,000 crore.
The SEBI chairman said the participation of individual investors in the market has increased by “leap and bounds”. He said that on an average around 4 lakh new demat accounts were opened per month in 2019-20, which increased to 12 lakh per month in 2020-21.
He said this trend has intensified during the current financial year 2021-22 – an average of 26 lakh demat accounts have been opened per month.
T+1 means that the settlement relating to market trade has to be approved within one day of the actual transaction taking place. Currently, trades on Indian stock exchanges are settled within two working days after the transaction (T+2).
“Early settlement will be good for all market participants. It is in everyone’s interest and the new system will not lead to liquidity fragmentation,” Tyagi said at an event organized by the Confederation of Indian Industry (CII).
This comes amid concerns raised by the brokers’ consortium over the implementation of the short settlement system.
NS Securities and Exchange Board The Government of India (SEBI) earlier this month allowed exchanges to go into the T+1 settlement cycle on an alternate basis.
As of now, SEBI has introduced this mechanism on an optional basis, so exchanges will decide whether to implement T+1 settlement or continue with the T+2 old mechanism. The new mechanism will come into effect from January 1, 2022.
This is not the first time that SEBI has decided to shorten the settlement cycle. Earlier in 2002, the capital markets regulator reduced the number of days in the settlement cycle from T+5 days to T+3 days, and then to T+2 days in 2003.
Tyagi said Indian markets are witnessing a boom in fundraising through Initial Public Offerings (IPOs).
During the last 18 months, growth oriented technology companies have raised around Rs 15,000 crore through IPOs. His filings with SEBI show a pipeline of around Rs 30,000 crore at present.
He said that the amount raised through IPO in the current financial year so far is almost equal to the amount raised in the entire financial year 2020-21, which was Rs 46,000 crore.
The SEBI chairman said the participation of individual investors in the market has increased by “leap and bounds”. He said that on an average around 4 lakh new demat accounts were opened per month in 2019-20, which increased to 12 lakh per month in 2020-21.
He said this trend has intensified during the current financial year 2021-22 – an average of 26 lakh demat accounts have been opened per month.
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