Sebi’s T+0 settlement plan will boost liquidity, but analysts warn of impact on brokers’ business model

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Also Read: Sebi pitches instant equity settlements Analysts believe that the regulator’s plan may free up the margins and boost liquidity in the markets, but will impact the business models of stock brokers who rely on interest income from client funds. “The shift to instantaneous settlement is a substantial milestone, streamlining operations and cutting down on risk.

The potential advantages of reducing counterparty risk and boosting liquidity signal positive growth for the sector," said Shauryam Gupta, CEO - Rupeezy. Coining similar views, Shrey Jain, Founder & CEO, SAS Online – a deep discount broker - noted that as per the current practice, at client level, instant settlement of trades is already happening on sale transactions as online brokers already give credit of funds in Trading Account as soon as the client sells holding stock.

“Option of T+0 settlement in phase 1 and moving forward real time settlement will actually help free up margins in the system at broker level To my mind, in Phase-1, where one can choose to settle trades executed till 1:30 pm on the same day, this initiative would garner momentum in phase-2 when real time settlement is implemented," Jain said. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) However, analysts also believe that the proposed shift will require high investors' education and will impact the business of brokers due to the reduced float period.

“In the short term, however, there's a need for heightened investor education. We’re introducing separate series for the same security at different prices, a change that may require some adjustment.