The Securities and Exchange Board of India (Sebi) plans to roll out an optional same-day settlement system in March next year as part of plans to introduce instantaneous settlement in 2025.
The regulator has been in consultation with market infrastructures and brokers to create a roadmap as it looks to lead to way in the global push to reduce settlement times.
India completed its move from T+2 to T+1 in January of this year.
The newly proposed timeline will apply to a parallel system and be on an optional basis, according to Sebi chairperson Madhabi Puri Buch, before adding that the change would apply initially to non-custodial accounts.
“Progress is very good, a lot of discussion has happened, and the roadmap is pretty much agreed now,” she said.
Buch explained how Sebi had altered its initial plans to move to optional one hour settlement and then move to instantaneous following feedback from market participants.
“What the market infrastructures and brokers together have told us is that the technology path they need to take to instantaneous settlement will be much better is if the first step we take is not 1-hour settlement but T+0,” she said.
“So there is an in-between step which has undergone a change based on the consultation. Their feedback was that it will be quicker and less expensive to go from T+0 to instantaneous rather than one hour to instantaneous. The incremental benefit of inserting a 1-hour in there may not be there.”
For T+1, India opted for a phased approach which did not occur on a parallel system. The implementation began in February 2022, when the bottom 100 stocks by market cap made the switch – with an increasing number of stocks transitioning throughout the year. The implementation concluded on 27 January, with the entire market of 5,500 scrips now settling on a T+1 basis.