SEBI Instant Settlement: SEBI proposed instant settlement for trading of shares in cash segment, sought suggestions by issuing consultant paper.

SEBI Instant Settlement Update: Investors trading in the stock market are going to get a big gift in the new year 2024. Stock market regulator SEBI has started preparations to implement the provision of instant settlement in the market. In this context, SEBI has proposed T+0 instant settlement for trading in shares in the cash segment. However, this proposal will be optional. SEBI has released a consultant paper on 22 December 2023 to seek suggestions on instant settlement. 

Releasing the consultant paper, SEBI said, in today's era, reliable, low cost and fast transactions are such features which attract investors very much. In such a situation, reducing the settlement time for buying and selling of shares and increasing the operational efficiency when dealing in Indian securities will help in attracting investors towards this asset class. SEBI said, in this regard, there is an option to start a shorter settlement cycle in addition to the existing T+1 settlement cycle in the equity cash segment."text-align: justify;">SEBI said that the regulator wants to implement it in a phased manner. In the first phase, T+0 settlement cycle can be started for trades till 1.30 pm. After this, the process of settlement of funds and shares will be completed by 4.30 pm. 

According to SEBI's consultant paper, there will be an alternative  instant settlement option in the second phase in which trade to trade settlement of both funds as well as securities will be done. Trading in this option can be done till 3.30 pm. After the implementation of the second phase, the option of  T+0 of the first phase will be closed. 

Initially with T+0 settlement, shares of top 500 companies in terms of market capitalization will be included for settlement. In the subsequent settlement cycle, companies with the lowest to lowest market cap will also be included in three phases. SEBI Chief Madhabi Puri Buch had recently said that SEBI is in talks with different parties to achieve the goal of improving the transaction settlement time frame. p>

At present there is a provision for T+1 settlement. That is, the day the investor buys a share, the share is credited to the demat account the next day. And if an investor sells the shares, then after 24 to 36 hours the funds are credited to the bank account after selling the shares. Due to this, investors are not able to do any other trade due to lack of funds.  After the implementation of the rules of Instant Settlement Transaction, the trade will be settled immediately. There are very few countries in the world where T+1 settlement rule is applicable which includes India. 

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