Understanding Benefits of SEBI's Same-Day Stock Settlement | Scheduled to Commence on March 28, 2024 | What You Need to Know about T+0 Rolling Cycle

Understanding Benefits of SEBI's Same-Day Stock Settlement | Scheduled to Commence on March 28, 2024 | What You Need to Know about T+0 Rolling Cycle

Understanding Benefits of SEBI's Same-Day Stock Settlement | Scheduled to Commence on March 28, 2024 | What You Need to Know about T+0 Rolling Cycle

Introduction :

The Securities and Exchange Board of India (SEBI) is set to revolutionize the stock market with its introduction of same-day stock settlement, known as T+0 rolling cycle. 

This move aims to streamline and expedite the trading process, bringing significant benefits to investors and market participants alike.

What is T+0 Rolling Cycle?

Traditionally, stock settlement in India follows a T+2 cycle, meaning transactions are settled two days after the trade date. 

However, with the implementation of T+0 rolling cycle, settlement will occur on the same day as the trade, providing faster access to funds and securities.

SEBI's Trial Run : 

SEBI has announced a trial run of T+0 settlement for 25 selected scrips, involving a limited number of brokers. 

This trial period is scheduled to commence on March 28, 2024, allowing SEBI to assess the feasibility and effectiveness of the new system before full implementation.

Benefits of Same-Day Settlement : 

1. Reduced Counterparty Risk : Same-day settlement minimizes the risk associated with delayed transactions, ensuring timely delivery of securities and funds.

2. Enhanced Liquidity : With funds and securities available immediately after the trade, investors can utilize their resources more efficiently, leading to improved market liquidity.

3. Greater Efficiency : T+0 settlement eliminates the waiting period between trade execution and settlement, streamlining the trading process and reducing administrative burdens.

4. Market Accessibility : Faster settlement encourages greater participation in the stock market, attracting new investors and diversifying market activity.

Challenges and Considerations : 

While the introduction of T+0 settlement brings numerous benefits, there are also challenges and considerations to address. These may include technological infrastructure upgrades, risk management protocols, and market participant readiness.

Conclusion : 

SEBI's decision to introduce same-day stock settlement marks a significant milestone in the evolution of India's financial markets. 

The trial run of T+0 rolling cycle for 25 selected scrips on March 28, 2024, signifies a proactive approach towards modernizing and enhancing market efficiency. 

As investors, it is crucial to stay informed about these developments and adapt to the evolving landscape of the stock market.

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