According to Anmi, for the smooth running of such a system, there could be operational and technical challenges at several levels, including banks, brokers’ back offices, depositories and other bodies involved in the trading, settlement and post-settlement processes. Last week, the Association of National Exchanges Members of India (Anmi) - a pan-India brokers’ body - had written to Sebi to not introduce the T+1 settlement cycle. Sebi has directed all the MIIs to take necessary steps to put in place proper systems and procedures for smooth introduction of the T+1 settlement cycle. It means for all trades - whether it’s a regular, small trade by a retail investor or a block deal by a large institution - settlement has to be under the T+1 cycle on the exchange. Once a stock is moved to the T+1 cycle on an exchange, this will apply to all types of transactions on that bourse. If it decides to switch back the scrip to T+2 cycle, it should give at least a month’s notice. However, Sebi said that once an exchange decides to shift a scrip to T+1 cycle, it has to continue for at least six months. Accordingly, an exchange may offer T+1 settlement cycle on any scrip after giving a month’s notice about the change, it said. Based on discussions with market infrastructure institutions (MIIs - stock exchanges, clearing corporations and depositories), it has been decided to provide flexibility to stock exchanges to offer either T+1 or T+2 settlement cycle,” the circular from the regulator said. “Sebi has been receiving requests from various stakeholders to further shorten the settlement cycle.

Currently, most markets around the world follow the T+2 system. On April 1, 2003, the Indian market had moved to the T+2 settlement cycle from T+3 cycle.

In the next days