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SEBI Announces Introduction of Optional T+0 Settlement Cycle to Boost Market Liquidity

Published on March 12, 2024
Current Context: The Securities and Exchange Board of India (SEBI) has announced that it will introduce an optional T+0 settlement cycle from March 28.
SEBI Announces Introduction of Optional T+0 Settlement Cycle to Boost Market Liquidity
  • This means that the settlement of trades will happen on the same day.
  • In the current T+1 process, investors selling their stocks receive money in their demat accounts on the next trading day.
  • With the T+0 settlement, the money will be credited on the same day of sale.
  • SEBI has proposed that the new settlement process will be implemented in two phases.
  • In the first phase, an optional T+0 settlement cycle is proposed for trades until 1:30 pm, with the settlement of funds and securities to be completed on the same day by 4:30 pm.
  • In the second phase, an optional immediate trade-by-trade settlement for funds and securities will be introduced, allowing trading until 3:30 pm.
  • After this phase is implemented, Phase 1 (optional T+0 settlement) will be discontinued.
  • This change is expected to increase liquidity in the market as it ensures faster access to cash, enabling more money to flow into the market.

Question:

Q.1 What is the current process before the introduction of the T+0 settlement cycle?
a. Investors receive money in their demat accounts on the same day of sale.
b. Investors receive money in their demat accounts two days after the sale.
c. Investors receive money in their demat accounts on the next trading day after the sale.
d. Investors receive money in their demat accounts one week after the sale.
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