What instant settlement mean for stock market, mutual fund investors — explained

livemint.com:

capital market regulator SEBI (Securities and Exchange Board of India) announced on Monday to move to T+1 settlement cycle for all scrips from 1st October 2023. This means effective from first October 2023, all trades will be settled one day after the date of trade instead of current T+2 settlement cycle.

While announcing about moving from T+2 to T+1 settlement cycle, SEBI chairperson Madhabi Puri Buch also made it clear that market regulator is not going to sit idle after moving from T+2 to T+1 cycle. She said that SEBI is working on instant transaction settlement cycle to bring more transparency by improving the timeline in transaction settlements.

According to Indian stock market experts, SEBI's instant settlement move will push trade volume in cash segment and chances of default or fraud will go down as one won't be able to trade if it has no fund available in one's demat account. Apart from this, instant settlement would mean instant payment for mutual fund investors as well because equity mutual funds invest in stock market and they will also move to instant settlement cycle the way they have moved from T+2 to T+1 settlement cycle.

Hailing the SEBI's move for instant settlement cycle, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "SEBI's move towards instant settlement is expected to up the pace of new equity issuances, debt issuances, approvals for mutual fund schemes. The move is expected to increase volume in cash segment as one would be able to move from one stock to another on the same date instead of waiting for settlement of one's trade after one day or two days (as applicable on the scrip)." He said that instant settlement would mean one won't be able to trade if it has no money