market regulator SEBI SEBI Chairperson Madhabi Puribuch on Monday said the government is working on a mechanism for instant settlement of trades in the stock market, called the T+0 system (view graphic), a process that will be faster than the existing system of settlement one day after the trade day (T+1).
The SEBI chief said, “India is the first major economy to move to T+1 settlement for all its securities.” He said the move helped free up additional funds (margin) of about Rs 10,000 crore in the system for investors. He said, the speedy settlement decision has led to several related benefits for the entire stock market ecosystem.
Globally, most developed markets operate on the T+2 system, while India is a pioneer in the T+1 system, which was fully implemented at the end of January this year. According to market players, a highly developed payment mechanism and an evolved stock transfer process by depositories in India will facilitate instant settlement.
The SEBI chief also said that technology has helped speed up the IPO approval process, loan issuance and approval for new schemes by mutual fund houses. For example, at one point of time, around 175 schemes had approval pending with SEBI. Now it has come down to six and out of those six, four are less than a month old. “Now…there’s practically no waiting time,” he said. Such speedy process for approval of various proposals has benefited the investor community to the tune of about Rs 3,500 crore per year.
The regulator also said that it may allow delisting of shares at a fixed price instead of the existing system of reverse book-building mechanism. Under the current arrangement, during the delisting offer, shareholders are allowed to place their bids at the price at which they are willing to give up their shares. He said SEBI will issue a discussion paper on this and invite comments from shareholders.