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Indian stock markets achieve full transition to shorter T+1 settlement regime

Indian stock markets achieve full transition to shorter T+1 settlement regime

 


On Friday, Indian equity markets made a full transition to a shorter settlement cycle or T+1 regime, a move that will bring significant capital gains to investors and improve risk mitigation for the entire industry.

T+1 (trade plus one) means settlements related to market trades will need to clear within one day of the actual trades occurring. Previously, trades on Indian exchanges were settled within two business days after trade (T+2).

All trades from January 27th executed on securities in the equity segment will be settled on a D+1 basis, the National Stock Exchange (NSE) said in a statement.

The journey towards the shortening of the settlement cycle began on September 7, 2021, when the capital markets regulator Sebi authorized exchanges to introduce the T+1 settlement cycle from January 1, 2022, on all securities available in the equity segment.

Following this, all market infrastructure institutions – exchanges, clearing houses and depositories – jointly finalized the roadmap for the implementation of the T+1 settlement cycle in a phased manner.

The first batch of securities transitioned to T+1 settlement on February 25, 2022, then each month a batch of approximately 500 securities transitioned to T+1 settlement.

From January 27, all securities – stocks, including shares of SMEs, exchange-traded funds (ETFs), real estate investment trusts (REITs), infrastructure investment trusts (InvITs),

Sovereign Gold Bonds (SGBs), government bonds and corporate bonds in the equity segment will now settle only on a T+1 basis.

Globally, most developed and emerging market exchanges follow the T+2 settlement system.

“This is a great achievement for the Indian capital market. This achievement would not have been possible without the continuous guidance provided by Sebi and the painstaking efforts of all

MIIs (Market Infrastructure Institutions), in particular Clearing Companies, Trading Members, Clearing Members, Custodians and all other stakeholders in redesigning processes and reducing lead times to adapt in order to shorten the settlement cycle.

“The shortening of the settlement cycle to T+1 will bring significant capital gains to investors and improve risk mitigation for the entire industry,” said Ashishkumar Chauhan, Managing Director and CEO of NSE.

The exchange said the achievement is significant given the size and scale of NSE’s operations in the equity segment.

With PTI inputs

Sources

1/ https://Google.com/

2/ https://www.zeebiz.com/market-news/news-indian-stock-markets-nse-nifty50-bse-sensex-share-market-benchmark-indices-t1-settlement-cycle-219251

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