SEBI Launched T+0 Settlement Mechanism For Top 500 Shares

The Securities and Exchange Board of India (SEBI) has revealed its plan to extend the optional T+0 settlement cycle to the top 500 companies by market capitalisation, effective as of December 31, 2024. The implementation will begin with the bottom 100 scrips, gradually adding the next 100 companies each month. This phased approach will ensure that all 500 companies are incorporated into the T+0 settlement cycle.

Broker Participation and Brokerage Charges

SEBI has stated that all stock brokers are invited to participate in the T+0 settlement cycle. Brokers can charge a differential brokerage for T+0 and T+1 settlements, provided they adhere to regulatory limits. To prevent disruptions, SEBI initially rolled out the T+0 mechanism exclusively for non-custodian clients starting March 28, 2024. This will be followed by a gradual expansion, with Qualified Stock Brokers (QSBs) required to implement the necessary infrastructure to facilitate institutional investors’ participation.

Key Features of the T+0 Settlement Cycle

In the T+0 settlement cycle, trades are settled on the same day they occur. This means that the transfer of shares to the buyer’s account and funds to the seller’s account happens on the same day as the trade.For block deals, a dedicated T+0 settlement window will operate from 8:45 am to 9:00 am, running in parallel with the existing T+1 block deal windows.

The eligibility of scrips for the T+0 settlement cycle will come into effect on January 31, 2025. However, the provisions for Qualified Stock Brokers (QSBs), custodians, and block deals will begin on May 1, 2024.

Trial Phase and Future Goals

This move follows the successful trial of the T+0 settlement cycle Beta version, which was introduced on March 28, 2024. The full implementation of T+0 will help ensure quicker settlements, enabling the buyer to receive shares and the seller to receive funds on the same day. Stock exchanges, clearing corporations, and depositories are tasked with ensuring that their systems are ready for the smooth execution of the T+0 settlement cycle. This is expected to improve settlement speeds and increase efficiency in equity cash markets.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.