The Securities and Exchange Board of India has proposed a ‘Trade-plus-one’ (T+1) settlement cycle from January 1, reducing the settlement time from the present trade-plus-two-day cycle, writes The Economic Times.
Initially, exchanges will be allowed to pick the stocks where they want to offer the next-day settlement.
Under T+1, the buyer would get the shares in the Demat account and the seller the sale proceeds the day after the trade.
The step will make India among a handful of countries that have adopted the shorter settlement cycle.
After opting for the T+1 cycle for a scrip, the stock exchange must continue with it for a minimum of six months.
Thereafter, the bourse can switch back to T+2 by giving a one-month notice to the market.
The regulator also said the new settlement option would be applicable to all types of transactions (regular as well as block deals) in the chosen security on that stock exchange.
Most global markets follow the T+2 settlement process. India switched to T+2 from T+3 in 2003.