T+0 settlement kick starts today: Exchanges witness token trades on day 1

The domestic markets on Thursday successfully conducted trades under the new same-day (T+0) settlement framework. However, both exchanges witnessed only token trades.

“On the first day, 63 members participated in this optional segment. As many as 41 members traded in 10 scrips and placed a total of 329 orders which resulted into 90 trades. Unique investors using this facility stood at 49,” said stock exchange BSE. According to Business Standard calculations the trading turnover under the T+0 settlement framework stood at Rs 11.9 crore on the BSE and Rs 46 crore on the National Stock Exchange (NSE). 

Sources said NSE saw 209 orders from 89 unique investors in 24 securities. Actual traders, however, stood at 46 in 14 securities, involving 32 brokers and 41 unique investors. NSE paid the first payout for these trades before 4:30 pm, added a source.

While market regulator the Securities and Exchange Board of India (Sebi) and market infrastructure institutions have laid the ground for T+0 settlement, the majority of brokers are yet to offer the shorter settlement cycle and are reading their systems.

Last year in January 2023, India successfully transitioned completely to a T+1 (trade plus one day) settlement for the equity segment. Many global peers still settle on a T+2 cycle. The market regulator has also cut down the time taken for listing after the end of subscription period for initial public offerings to T+3.

On the transition to T+0, Sundararaman Ramamurthy, the managing director and chief executive officer (MD & CEO) of BSE, said, “This is a significant step towards greater efficiency and reduced risk in our market. We are confident that this optional settlement cycle will contribute to the continued growth and development of the capital markets in India.”

Initially, the T+0 settlement is being tested in a ‘beta’ form on only 25 stocks. The same-day settlement framework will remain optional and run parallel to the current T+1 cycle in the equity cash segment.

Sebi has directed stock exchanges or depositories to disseminate the list of brokers that will be participating in the beta version of T+0 settlement on a periodic basis.

To ensure there is no fragmentation of liquidity, the price spread between T+1 and T+0 settlement will have to be narrow. Sebi has said, “The price in the T+0 segment will operate with a price band of ±100 basis points from the price in the regular T+1 market. This band will be recalibrated after every 50 bps movement in the underlying T+1 market.”

Moving fast
 

• Turnover on for trades settled in T+0 stood at Rs 46 crore and 11.9 crore on NSE and BSE, respectively

• A total of 41 members traded in 10 scrips, 49 unique investors used the facility: BSE

• 41 unique investors traded in the new shorter cycle on NSE, as per sources

• Large brokers yet to provide the facility to their clients