SEBI Delays T+0 Settlement: Broker Issues Halt Same-Day Trades
By Market Desk
SEBI indefinitely postpones T+0 settlement cycle due to broker readiness issues and limited market participation, impacting same-day fund and share credit for investors.
The Securities and Exchange Board of India (SEBI) has indefinitely postponed its planned T+0 settlement cycle, which aimed to provide investors with same-day credit for shares and funds. This decision follows significant challenges raised by the brokerage industry and concerns over low market participation.
Brokerage Industry Challenges
Brokers faced considerable hurdles in implementing the T+0 system, primarily related to financial implications and technology infrastructure. These included the loss of ‘float income,’ which is interest earned on overnight client funds. Additionally, they cited substantial technology upgrade costs required to meet compressed settlement timelines without a clear return on investment.
Market Participation Hurdles
The proposed T+0 model also struggled to gain broad market interest due to its structural limitations. It notably excluded foreign and institutional investors, owing to complexities in coordinating cross-border securities and currency settlements within a single day. This exclusion directly resulted in thin trading liquidity in the T+0 segments, making the system less attractive.
Furthermore, long-term investors showed limited incentive to transition from the already efficient T+1 system. Day traders, who might benefit from faster settlements, frequently utilize derivatives and margin trading, which offer similar benefits without the T+0 constraints.
Previous Rollout Attempts and Limited Adoption
SEBI had previously initiated a phased rollout to test the T+0 settlement system, starting with a beta version on the National Stock Exchange (NSE) and the BSE in March 2024. This beta expanded to the top 500 stocks, yet adoption remained limited among market participants. Initial deadlines for a full rollout were set for May 2025 and subsequently adjusted to November 2025.
Future Outlook for Settlement Reforms
SEBI’s latest action indicates a shift towards a more cautious approach, suggesting that any future reforms will depend on new directives from the regulator. These directives are expected to include revised frameworks and potential incentives for brokers to facilitate adoption. Further infrastructure improvements will also be crucial to address concerns from both retail and institutional investors.