SEBI announces path-breaking move to T+1 settlement cycle

livemint.com:

SEBI chairperson Madhabi Puri Buch discusses the recent developments with the investors. The Securities and Exchange Board of India, announced that it will move to a T+1 settlement cycle for all scrips, effective October 1, 2023. This means that trades will be settled one day after the date of the trade, instead of the current two-day settlement cycle.

T+1 is a path-breaking move that will make the Indian securities market more efficient and transparent. It will also reduce the risk of settlement failures and improve liquidity in the market. India will be the first major economy to move to a T+1 settlement cycle for all scrips.

This move is in line with global trends and will help to make the Indian securities market more competitive. Increased efficiency: The T+1 settlement cycle will reduce the risk of settlement failures and improve liquidity in the market. This will make it easier for investors to buy and sell securities, and it will also reduce the cost of trading.

Improved transparency: The T+1 settlement cycle will make it easier for investors to track the movement of their investments. This will help to improve transparency in the market and protect investors from fraud. Increased competitiveness: The T+1 settlement cycle will make the Indian securities market more competitive with other global markets.

This will attract more foreign investment and help to boost economic growth. The current T+2 settlement cycle is outdated and inefficient. She notes that the T+2 cycle was introduced in 1996, and that since then, the securities market has undergone significant changes.