Sebi fires fresh shot at T+0 revival; market players sceptical of impact

Industry players believe measures, while important, may not yield higher participation

The Securities and Exchange Board of India (Sebi) has announced a slew of measures to infuse life into the same-day (T+0) settlement cycle. However, market players are divided over their effectiveness given the lack of interest in the framework in the present form.

At its board meeting held on Monday, the market regulator decided to expand the list of eligible stocks under T+0 to top 500 stocks on the basis of market capitalisation in a phased manner. Furthermore, it directed qualified stock brokers (QSBs) to put in place the systems to enable seamless participation.

At present, the T+0 settlement is available as an optional mechanism and runs parallel to the T+1 (trade day plus one) settlement cycle.

According to data on the exchanges, five scrips of the 25 eligible ones for T+0 did not receive a single trade in the same day cycle.

The trades have further dried up in the past month with the last T+0 settlement on NSE done on June 21 in the scrip of Ashok Leyland while the same on BSE was on September 5 for State Bank of India (SBI). 

The total turnover till date on both the exchanges has been less than Rs 10 lakh.

“The demand has to come from investors, and they don’t see much difference in the same day settlement. Expanding the list of scrips may not lead to the desired push unless brokers start offering the option. However, instantaneous settlement would have actually been a game changer, but the board seems not inclined to push it at the moment,” said a broker.

Sebi said the earlier proposal to move from optional T+0 settlement to optional instantaneous settlement has been kept on the backburner as of now.

Another market player said that the T+0 may not pick up unless it is mandated or a stronger push comes for the implementation as the brokers are yet to offer the optional framework to their clients.

Sebi has allowed stock brokers to charge differential brokerage for offering the access to T+0.

On the mandate for setting up systems by QSBs and custodians to enable participation, Sebi said that it will provide appropriate time for implementation.

With such systems in place, the foreign portfolio investors (FPIs) and mutual funds will be able to access the T+0 cycle, Sebi noted.

The regulator has also decided to introduce an optional block deal window mechanism under the T+0 between 8:45 am to 9:00 am alongside the current T+1 cycle.

Sources said this proposal has come from the industry. Industry players said this window could gain traction as it will lead to savings due to faster transfer of shares and funds.

Sebi is of the view that the shift to the T+0 settlement cycle will help free up capital, allow clients to have better control of their funds and securities, and enhance risk management by clearing corporations.

However, the regulator doesn’t want to move entirely to the new regime given the move from T+2 to T+1 is only recent.