The Securities and Exchange Board of India (SEBI) has issued a significant circular that expands the scope of the optional T+0 rolling settlement cycle. Key Enhancements in the Scope of Optional T+0 Settlement Cycle includes the following:
Expansion of Eligible Scrips:
SEBI’s latest circular outlines a significant expansion in the number of scrips available for the T+0 settlement cycle. Starting from January 31, 2025, the optional T+0 settlement will be available for the top 500 scrips in terms of market capitalization. These will be gradually introduced, with the bottom 100 companies from this list being included first, followed by the next 100 companies every month, until all 500 top scrips are available.
Participation Open to All Stock Brokers:
In a bid to ensure inclusivity, SEBI has decided to allow all stock brokers to participate in the optional T+0 settlement cycle. Brokers will have the flexibility to charge different brokerage rates for T+0 and T+1 settlement cycles, within regulatory limits. This step is expected to drive broader participation, making the system more robust and liquid.
Qualified Stock Brokers (QSBs):
Another significant change pertains to Qualified Stock Brokers (QSBs). By December 31, 2024, brokers who meet specific criteria will need to have the systems in place to support the seamless participation of investors in the T+0 settlement cycle. New QSBs will be given three months to establish the necessary infrastructure once their designation is updated.
Custodians’ Role:
Custodians, along with Market Infrastructure Institutions (MIIs) such as stock exchanges, clearing corporations, and depositories, are also required to implement the necessary systems for facilitating institutional investors’ participation in the T+0 settlement cycle. This ensures that the institutional segment, which is a significant part of market activity, is not left behind.
Block Deal Window for T+0:
To cater to large trades, SEBI has introduced a Block Deal window for the T+0 settlement cycle. This window will be available in the morning session (8:45 am to 9:00 am), in addition to the existing T+1 Block Deal windows. All trades conducted in the T+0 window will be settled on the same day, providing a streamlined process for large-volume trades.
Implementation Timelines
The phased implementation of these measures will occur over the next few months:
- From January 31, 2025: The expansion of eligible scrips and stock broker participation will begin.
- From May 1, 2025: Provisions related to QSBs, custodians, and the Block Deal window will come into effect.
