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Stock market: SEBI allows T+1 settlement cycle on alternate basis from Jan 1

New Delhi: After almost a year of consideration, capital markets regulator SEBI has finally started the T+1 settlement cycle to complete the share transactions on alternate basis to increase the liquidity in the market.

Presently, the transactions in the Indian stock exchanges are settled within two working days from the date of occurrence (T+2). This meant that the seller could not demand payment for at least two days due to the T+2 settlement cycle.

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what does this mean?

This means that stock exchanges will have the option to transfer shares and funds to client accounts in less than 24 hours after the T+1 (today plus one) settlement cycle for equity transactions comes into force from January 1, 2022.

A stock exchange may choose to offer a T+1 settlement cycle on any stock, after giving at least one month’s notice on the change to all stakeholders, including the public, and disseminating the same on its website.

“SEBI is receiving 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 cycles,” the market regulator said. , according to the Hindu report.

“Stock exchanges, clearing corporations and depositories are directed to take necessary steps to put in place proper system and procedures for smooth introduction of T+1 settlement cycle on alternate basis, including those required in the relevant bye-laws, regulations amendments are included. , and regulations,” SEBI said.

Discount brokers and online new-age tech trading firms were demanding a quick settlement cycle as most online stockbrokers rely on few employees and heavily rely on technology that enables contactless trading and settlement. . Most of the trading, post-trading queries and transaction settlements by such brokers are done through mobile applications, where clients punch their own trades and transfer money to various accounts online.


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