SEBI aims to settle shares within an hour

In a landmark announcement for the Indian stock market, SEBI Chairperson Madhabi Puri Buch unveiled a ground breaking shift in trade settlement policy at the Global Fintech Summit in Mumbai on Tuesday. This development positions India at the forefront of financial markets worldwide.

The idea is that by March 2024, SEBI aims to introduce a one-hour trade settlement cycle, replacing the current T+1 system. This bold step makes India the first jurisdiction globally to transition to T+1 settlement, a crucial step toward achieving instantaneous settlements.

SEBI's history shows a willingness to shorten settlement cycles, reducing from T+5 days to T+3 days in 2002, and then to T+2 days in 2003. Each adjustment brought the market closer to real-time settlements.

SEBI's roadmap toward instantaneous settlements reveals an ambitious commitment to embracing technology. Transitioning from a one-day to a one-hour cycle, and ultimately to instantaneous settlements, demonstrates SEBI's dedication to innovation.

The move promises to expedite fund flows, eliminating an extra day of waiting and offering greater flexibility for traders and investors.

SEBI's vision extends beyond settlement cycles. The Chairperson hinted at plans to provide clients direct bourse access in case of broker server crashes, reducing risks and enabling efficient position management.

Moreover, an Application Supported By Blocked Amount (ASBA)-like facility for the secondary market may arrive by January 2024. ASBA, successful in IPO applications, allows funds to earn interest while temporarily blocked, potentially lowering margin requirements for clients and enhancing retail investment prospects.