The Securities and Exchange Board of India (SEBI), the country’s market regulator, is set to roll out the beta version of T+0 settlement from March 28. The announcement came amidst a series of proposals approved by the board, aimed at facilitating ease of doing business and enhancing market transparency. The move is expected to significantly impact market liquidity and risk levels.
Embracing a New Settlement Cycle
In an effort to increase market efficiency, SEBI is introducing a beta version of the T+0 settlement cycle. This system will allow for the settlement of funds and securities on the same day of the transaction, a significant shift from the existing T+1 settlement cycle. This optional settlement cycle will be made available for a limited set of 25 scrips and a select group of brokers.
This move is expected to increase liquidity in the market and decrease risk, as funds and securities will change hands more quickly.
Stakeholder Consultation and Review
SEBI is committed to ensuring the smooth implementation of the T+0 settlement cycle. As part of this commitment, the board will continue to engage with stakeholders, including users of the beta version, to gather feedback and make necessary adjustments.
The board plans to review the progress of this new settlement cycle at the end of three months and six months from the date of implementation. Based on this review, SEBI will decide on the future course of action.
FPI Disclosure Norms Eased
In addition to the launch of the T+0 settlement, the SEBI board also approved various relaxations for Foreign Portfolio Investors (FPIs). These relaxations are aimed at improving ease of doing business for these investors.
FPIs that hold not more than 50% of their India equity Assets Under Management (AUM) in a single corporate group will be exempted from additional disclosure requirements, under certain conditions.
Facilitating Ease of Doing Business
In line with its commitment to facilitating ease of doing business, SEBI has made several changes to its regulations. For instance, it has done away with the mandatory 1% security deposit in public/rights issues.
Furthermore, promoter group entities and non-individual shareholders holding more than 5% of the post-offer equity share capital will now be allowed to contribute towards minimum promoters’ contribution (MPC) without being identified as promoters.
Rumor Verification by Listed Entities
In an effort to maintain market integrity, SEBI has set an objective and uniformly assessed criteria for rumour verification in terms of material price movement of equity shares. Promoters, directors, key managerial personnel, and senior management are required to provide timely responses to listed entities for verifying rumours impacting their scripts.
A Step towards Market Efficiency
The implementation of the T+0 settlement cycle, relaxations for FPIs, and other regulatory changes are significant steps towards improving market efficiency and transparency. These changes are expected to contribute to the growth of India’s capital market and attract more foreign investments.
As SEBI continues to engage with stakeholders and adapt its regulations to meet market needs, it is expected that these changes will drive greater market participation and deepen the capital market.
SEBI’s move to implement the T+0 settlement cycle and ease FPI disclosure norms underscores its commitment to market transparency, efficiency, and ease of doing business. As the market regulator continues to innovate and adapt its regulations to meet evolving market needs, it is setting the stage for a more robust and dynamic capital market in India.