India launches world's fastest stock settlement system
- In Reports
- 06:46 PM, Mar 28, 2024
- Myind Staff
BSE and NSE are set to initiate trading in an experimental (beta) version under a T+0 settlement cycle for 25 stocks, aiming to provide investors in India with the fastest stock trading and settlement service globally. This 'same day' settlement system is anticipated to reduce market risks while freeing up funds for investors to allocate towards additional trading and investment activities.
Under the T+0 system, stocks purchased and sold between 9.15 am and 1.30 pm will be settled by the end of the day.
Presently, the Indian market operates under the T+1 settlement system, whereby buyers receive the stocks in their demat accounts on the following working day after the trade, and sellers receive funds in their bank accounts one working day after the trade.
BSE has published a list of 25 eligible stocks to be settled under the T+0 settlement cycle. The stocks included are Ambuja, Ashok Leyland, Bajaj Auto, Bank of Baroda, BPCL, Birlasoft, Cipla, Coforge, Divis Labs, Hindalco, Indian Hotels, JSW Steel, LIC Housing Finance, LTI Mindtree, MRF, Nestle India, NMDC, ONGC, Petronet LNG, Samvardhana Motherson International, SBI, Tata Communications, Trent, Union Bank of India, and Vedanta.
Although the planning for a same-day settlement had been ongoing for over a year, Sebi gave approval to launch a beta version during its board meeting on March 15. It stated that it would review the progress of the system after three and six months.
Last week, Sebi instructed market infrastructure institutions to collaborate on the implementation of the new settlement cycle. The forthcoming settlement cycle will be optional for investors and will feature a distinct trading window, with trading concluding at 1.30 pm each day. Sebi also announced that specific brokers will be permitted to provide this accelerated settlement service to their clients. As of now, the exchanges have not yet published the list of selected brokers.
A Sebi circular stated that under the T+0 settlement cycle, each stock will be assigned a price band equivalent to plus or minus 1 percentage point of the same stock's price in the T+1 cycle.
Image source: Business today
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