SEBI Aims For One-Hour Trade Settlement By Early 2024

New Delhi, Sept 6 (KNN) The Securities and Exchange Board of India (Sebi) is planning to implement one-hour trade settlement by early next year, Chairperson Madhabi Puri Buch said on Tuesday.

“India is the first jurisdiction in the world that has moved to T+1 (trade date plus one day) settlement. We are now talking about a one-hour settlement and that will be a stepping stone to instantaneous settlement. This will be in a reasonably short period of time,” the Sebi chief said at the Global Fintech Fest in Mumbai.

“Technology already exists to launch up to one-hour settlement; we just have to make it happen,” she said on the sidelines of the event.

India transitioned to T+1 settlement from T+2 in a phased manner, starting with bottom companies in terms of market capitalisation. Top companies were moved to the shorter settlement cycle only at the end of January.

Under T+1 settlement, the transfer of securities and funds takes place the following day of the trade. In the one-hour settlement system, shares will be credited to the demat account within an hour. Many countries, including the US, still have a T+2 settlement cycle.

She also said the Application Supported by Blocked Amount (ASBA)-like facility for trading in the secondary market will likely be launched in January 2024.

However, as there have been some apprehensions from foreign portfolio investors, the chairperson said the initial phase of ASBA-like mechanism for the secondary market would be optional for overseas funds.

She also backed the usage of artificial intelligence (AI) for granular supervision and reducing the information overload of disclosures on regulated entities like stock exchanges, mutual funds, portfolio management services, and wealth management firms, among others.

Buch said the data disclosures being made available to the public could act like a “goldmine for AI to do analysis and monetise on it”.

At present, Sebi is using around 80 algorithms for supervision of mutual funds and is generating a periodical report on non-compliance and other issues. The market regulator plans to extend the mechanism with the help of AI to all other regulated entities.  (KNN Bureau)