Stock exchanges will finally introduce the beta version of 'T+0' or the same-day trade settlement on Thursday i.e. March 28, 2024, allowing select 25 equities to choose the new system for trades in the cash segment.

The 25 stocks included in the BSE’s T+0 cycle are LTIMindtree, Nestle India, ONGC, Trent, Vedanta, Ambuja Cements, BPCL, Divis Lab, Indian Hotels, NMDC, Tata Communications, Ashok Leyland, Bajaj Auto, Bank of Baroda, Coforge, Cipla, Hindalco, LIC Housing Finance, Petronet LNG, Samvardhana Motherson International, SBI, Tata Communications, Union Bank of India, JSW Steel and Birlasoft.

Initially, the new arrangement will be allowed only for 25 stocks, with a select few brokers. The trade will be allowed between 9.15 am and 1.30 pm IST. The market regulator will review the progress after three and six months and decide if the new system can be deployed for more equities.

The price in the T+0 segment will operate with a price band of +100 basis points from the price in the regular T+1 market. It'll be re-calibrated after every 50 basis points movement in the underlying T+1 market.

According to SEBI, a shortened settlement cycle will bring cost and time efficiency, transparency in charges to investors and strengthen risk management at clearing corporations and the overall securities market ecosystem.

The capital markets regulator, on March 21, 2024, had decided to put in place a framework for the launch of the Beta version of the T+0 settlement cycle on an "optional basis" in addition to the existing T+1 settlement cycle in the equity cash market.

As part of the operational guidelines, all investors are eligible to participate in the segment for the T+0 settlement cycle if they meet the timelines, process and risk requirements as prescribed by the market infrastructure institutions (MIIS).

The surveillance measures as applicable in the T+1 settlement cycle will be applicable to scrips in the T+0 settlement cycle. Also, T+0 prices will not be considered in index calculation and settlement price computation. “There shall be no separate close price for securities based on trading in the T+0 segment.”

The guideline also says that there will be no netting in pay-in and pay-out obligations between the T+1 and T+0 settlement cycle.

“Through this initiative, our settlement systems will be on par with and even surpass those of many developed nations. As a result, the Indian stock market will be recognised as forward-thinking, innovative, and progressive on the global stage. This action highlights SEBI's commitment to building a healthy, sustainable financial environment that fosters greater investor participation and trust. It also showcases SEBI's proactive approach to ensuring market integrity, regulatory effectiveness, and investor welfare,” says Samir Shah, head, online business, Axis Securities.

Notably, in the current T+1 system, sellers can only access 80% of their funds on the sell day, while waiting until the next day to receive the remaining 20%. However, with the new T+0 settlement system, sellers will have access to 100% of their funds on the same day of trade. “This development will increase liquidity for investors, allowing them to quickly enter into other trades without losing out on investment opportunities due to waiting periods,” adds Shah. Additionally, the new system will reduce counterparty default risks.

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