T+0 Settlement:
Stock exchanges have decided to delay the implementation of T+0 (same-day) settlement cycle for institutional clients, which was set to start on September 30, 2024, on a voluntary basis. T+0 was introduced for retail clients in 25 securities as a beta version in March 2024.
- T+0 Settlement refers to same-day settlement of trades where both funds and securities are exchanged on the same day.
- T+1 Settlement system, trades are settled one business day after the transaction date. It was introduced in 2021 and has already been implemented in phases.
- Foreign portfolio investors (FPIs) are resisting T+0 due to the pre-funding requirements, and systems aren’t fully ready for seamless adoption.
- Faster Settlements reduces the risks associated with delayed settlements and facilitates quicker access to funds and securities for investors.
- T+0 can optimize fund utilization, particularly benefiting retail investors with limited capital.
- T+1 has already led to reduced error rates in settlements, especially for FPIs, improving overall market efficiency.
