SEBI to allow instant settlement of equity trades in non-disruptive manner

Instant settlement: Indian market regulator SEBI has said that it will implement a plan to allow the settlement of equity market trades within the same day in a non-disruptive manner and hold back if there are "serious objections" from market participants.

Liquidity Fragmentation

India in January had transitioned to T+1 settlement in which trades were settled within a day. As another option, SEBI is planning to let instant settlement by October next year as another option. 

However, as per Reuters offshore investors were pushing back on the Securities and Exchange Board of India's (Sebi) instant settlement plan on fears that two settlement cycles would lead to a fragmented system and add to the cost of trading. 

Also Read: SEBI aims to introduce instant settlement in stock markets by FY25

SEBI's Whole-Time Member Ananth Narayan too acknowledged that the regulator was worried the move would lead to the fragmentation of liquidity.

"If there are serious objections, we will not do it, but we are presently exploring instant settlement in a non-disruptive manner," Narayan said at Mumbai's The Network Forum Asia, a forum of offshore investors and custodian banks.

Narayan further added that SEBI had formed a working group to ease regulations and the registration process for offshore funds under the chairmanship of a former Sebi whole-time member.