India Implements 'Beta Version' Of T+0 Settlement System In Stock Market: All About It

India's stock market is all set to adopt the T+0 settlement system, joining a select group of countries embracing shorter trade settlement cycles.

The move comes as part of efforts to enhance market efficiency and liquidity.

The T+0 settlement system, where trades in shares are settled on the same day as the trade (T), eliminates the delay of the previous T+1 cycle.

This means that shares will be transferred to the buyer's account and funds deposited in the seller's account promptly, streamlining the transaction process.

To ensure a seamless transition, exchanges will introduce a 'beta version' of the shorter settlement cycle on an optional basis alongside the existing T+1 cycle.

Under this pilot project, a limited number of brokers will offer same-day settlement for 25 selected stocks during a designated trading session from 9:15 AM to 1:30 PM.

The implementation of the T+0 system aims to enhance market dynamism and liquidity.

The shorter settlement cycle is also anticipated to alleviate brokers' funding requirements, as funds will be released earlier upon settlement.

India's stock trade settlement cycle has undergone significant evolution over the years.

From the T+5 settlement cycle, the country transitioned to T+3 in 2002 and further reduced it to T+2 in 2003.

The introduction of the T+1 system in 2021 was later normalized in 2023.

Globally, most markets adhere to the T+2 settlement system, with the US slated to transition to T+1 in May.

Notably, China already operates on a T+0 settlement system.

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