T+0 settlement to begin by March 28 on optional basis, says Sebi Chairperson Madhabi Puri Buch: Report

Markets regulator Securities and Exchange Board of India (SEBI) will begin the T+0 trade settlement cycle on an optional basis by March 28, chairperson Madhabi Puri Buch said, a report said.

Speaking on the sidelines of an AMFI event felicitating women fund managers on Monday, Buch also said that the instant settlement cycle will be done by March 2025, CNBC-TV18 reported. 

According to the SEBI chairperson, the move towards faster settlements is due to the rise of alternates like cryptocurrency, the report added.

“We want to ensure our regulated market is competitive and offers the same advantages to investors,” she said.

A T+0 settlement would mean trades will settled on the same day, while instant settlement would ensure that the settlement of securities and funds happens immediately.

The Indian stock market follows the T+1 (trade plus one day) settlement cycle for all scrips at present. 

In December 2024, Sebi issued a consultation paper proposing to introduce same-day settlement of trades on stock exchanges and real-time settlement on an optional basis and in a phased manner. 

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

In the first phase, an optional T+0 settlement cycle for trades till 1:30 pm is envisaged, with the settlement of funds and securities to be completed on the same day by 4:30 pm.

In the second phase, an optional immediate trade-by-trade settlement will be carried out for trades till 3.30 pm. 

The settlement cycle in the Indian stock market was shortened from T+5 to T+3 in 2002 and then further to T+2 in 2003. In 2021, Sebi introduced the T+1 settlement cycle in a phased manner, which was fully implemented from January 2023.

SEBI on SME IPOs

The SEBI chairperson also highlighted that the regulator has noticed “signs of manipulation in the SME segment”, and it has been monitoring price manipulation instances at the IPO, the news report said.

“We do see signs of manipulation in the SME segment. The market has given its feedback. We are working on robust evidence and feedback for action,” Buch said.

Also Read: Sebi may review rule for funds targeting overheated small caps

Sebi on Smallcap funds

Buch also said that the regulator was open to revising rules for mutual funds investing in small-cap stocks amid growing concerns about stretched valuations for this segment, Bloomberg News reported.

The Sebi will review its rule that mandates small- and mid-cap funds to invest at least 65% of their assets in such stocks if fund managers find it is “restraining risk management,” Buch told reporters in Mumbai.