The Securities and Exchange Board of India (SEBI) is set to introduce instant settlement of equity trades, potentially by October 2024. This initiative aims to empower retail investors by providing them the option to settle trades within the same day, a significant leap from the current T+1 (Trade plus one day) settlement system.

How Do Instant Settlements Affect Traders?

Per a Reuters report, the proposed system aims to enhance liquidity and grant immediate access to funds, potentially revolutionizing the trading experience for day traders and those eager to swiftly capitalize on market movements. However, the plan has met with some resistance from offshore investors, who fear that the dual settlement cycles might lead to a fragmented market and increased trading costs.

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SEBI, however, is treading carefully. At The Network Forum Asia, Ananth Narayan, a whole-time member of SEBI, assured that the organization would meticulously plan any transition to instant settlements to avoid market disruption. The regulator is considering feedback from market participants, indicating that the move will only proceed if there are no significant objections.

The instant settlement system aims to streamline the trading process and mitigate the risk of price fluctuations between the order and settlement times. This could lead to a more dynamic and responsive market environment, benefiting traders and bolstering the overall market structure.

As India’s market landscape evolves, SEBI’s commitment to regulatory agility and innovation continues to position the nation’s financial markets at the forefront of global investment destinations.

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