Facts for Prelims (FFP)
Source: IE
Context: SEBI, India’s securities market regulator, is working on introducing real-time settlement of transactions in the stock exchanges, known as T+0 settlement.
Currently, the settlement process takes one day (T+1) after the trade date, but with T+0 settlement, funds and securities will be transferred instantly on the same day as the trade. This shift will bring operational efficiency, faster fund remittances, and immediate availability of money and shares for investors.
What is the T+1 settlement cycle?
In simple terms, T+1 settlement means that securities transactions will reflect in the demat account after a day instead of two days now under the T+2 cycle. If an investor buys a stock on Thursday, it would be shown in the demat account on Friday. Now with T+0 settlement, investors can find the purchased on the same day (i.e., Thursday)
T+2: Was introduced in 2017
T+1: Was recently allowed in the Indian stock market (January 2023)
T+0: May be introduced by the next financial year (2024)
