• Market regulator Securities and Exchange Board of India (SEBI) has approved the launch of the beta version of the T+0 settlement on an optional basis from March 28.
• Currently trades in India are settled in T+1. The T+1 settlement cycle means that trade-related settlements must be done within a day.
• T+0 would mean settlements in the same day and instant settlement would ensure trades are settled immediately.
• SEBI announced the new and optional settlement cycle after a meeting with its Board.
• The Board approved the launch of a beta version of optional T+0 settlement, for a limited set of 25 scrips, and with a limited set of brokers.
• In parallel, SEBI shall continue to do further stakeholder consultation, including with the users of the beta version.
• The Board shall review the progress at the end of three months and six months from the date of this implementation, and decide on further course of action.
• The new T+0 regime will be available as an option alongside the existing T+1 settlement cycle.
Why SEBI took this decision?
• Over the last few years, Indian securities markets have seen tremendous growth, both in terms of volumes, value, as well as number of participants. This increase in participation of new investors in securities market puts greater onus on SEBI to make markets more efficient and safer for itsparticipants, with a special focus on retail participants.
• SEBI, in its endeavour to keep pace with the changing times and carry out its mandate of development of securities markets and investor protection, shortened the settlement cycle from T+5 to T+3 in 2002 and subsequently to T+2 in 2003.
• Further in 2021, T+1 settlement was introduced in a phased manner which was fully implemented from January 2023.
• In today’s age, reliability, low cost and high speed of transactions are key features that attract investors to particular asset classes. To that extent, reducing settlement time and hence increasing operational efficiency of dealing in Indian securities can further draw and retain investors into this asset class.
• In this regard, it is envisaged that for equity cash segment, in addition to the existing T+1 settlement cycle, a shorter settlement cycle is introduced as an option.
What is the role of SEBI?
• The Securities and Exchange Board of India (SEBI) was constituted as a non-statutory body on April 12, 1988 through a resolution of the government of India for dealing with all matters relating to the development and regulation of the securities market and investor protection and to advise the government on all these matters.
• SEBI was given statutory status and powers through an Ordinance promulgated on January 30, 1992. SEBI was established as a statutory body on February 21, 1992. The Ordinance was replaced by an Act of Parliament in April 1992.
• The Board has the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit.
The main objectives of SEBI are:
i) To protect the interest of the investors.
ii) To regulate and promote development of securities markets in India.
The main functions of SEBI include:
i) Registration, regulation and supervision of intermediaries operating in the securities market.
ii) Promoting and regulating self-regulatory organisations.
iii) Prohibiting fraudulent and unfair trade practices relating to securities markets.
iv) Calling from or furnishing to other authorities, whether in India or abroad, such information as may be necessary for the efficient discharge of its functions. The Board, for the purpose of furnishing any information to any authority outside India, may enter into an arrangement or agreement or understanding with such authority with the prior approval of the central government.
Members of the Board
The Board consists of:
i) Chairperson
ii) Two members from the officials of the finance ministry.
iii) One member from the officials of the Reserve Bank of India.
iv) Five other members of whom at least three shall be whole-time members, to be appointed by the central government.
• The general superintendence, direction and management of the affairs of the Board shall vest in the Board of members, which may exercise all powers and do all acts and things which may be exercised or done by the Board.
• A Financial Sector Regulatory Appointment Search Committee (FSRASC) has been created by the government for recommending names of suitable persons for appointment to board level positions of financial sector regulatory bodies.
• The candidates are shortlisted by the FSRASC headed by Cabinet Secretary.
• The shortlisted candidates are interviewed by the panel comprising Economic Affairs Secretary and three external members having domain knowledge. Besides, the high level panel has authority to recommend names other than those who have applied for the advertised post.
• Based on interactions, FSRASC recommends names to the Appointments Committee of Cabinet headed by the Prime Minister.
Securities Appellate Tribunal
• Securities Appellate Tribunal is a statutory body established under the provisions of the Securities and Exchange Board of India Act, 1992 to hear and dispose of appeals against orders passed by SEBI or by an adjudicating officer under the Act.
• SAT hears and disposes of appeals against orders passed by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act, 2013.
• SAT also hears and disposes of appeals against orders passed by the Insurance Regulatory Development Authority of India (IRDAI) under the Insurance Act, 1938, the General Insurance Business (Nationalisation) Act, 1972 and the Insurance Regulatory and Development Authority Act, 1999 and the Rules and Regulations framed thereunder.
• The SAT consists of a presiding officer and two other members to be appointed by the central government.
• The presiding officer shall be a sitting or retired judge of the Supreme Court or High Court.
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