T+0 trade settlement: Markets regulator, Securities and Exchange Board of India (SEBI), has announced the introduction of an optional same-day settlement scheme for 25 specific stocks, set to commence on March 28. This initiative, termed as a beta version by SEBI, will operate alongside the existing T+1 settlement system.

Under the T+1 settlement system, trades are settled within 24 hours of execution. However, with the introduction of the optional T+0 settlement, eligible trades executed between 09:15 a.m. to 1:30 pm can now be settled on the same day.

SEBI has outlined strict guidelines for the implementation of the T+0 settlement, including the disclosure of eligible stocks by exchanges on their respective websites. Additionally, exchanges will provide regular updates on the progress of activities related to the beta version of the settlement cycle.

Participation in the T+0 settlement will be subject to adherence to exchanges' processes and risk management norms by brokers, who will be listed by the bourses. To prevent market distortions, trading in T+0 will be regulated by a price band of 100 basis points above or below prices in T+1. Furthermore, SEBI stresses that prices in the T+0 settlement will not be considered for index calculation or determining the settlement price of shares.

This strategic move by SEBI aims to enhance market efficiency and provide greater flexibility to market participants. By introducing same-day settlement for select stocks, SEBI seeks to streamline trading processes and align with global best practices in securities settlement.

(With Reuters inputs)