Mumbai: The Sebi regulator market is a shorter settlement cycle (T + 1) and the imposition of higher margins both aimed at making the Indian market safer and the interests of investors, Chairman Ajay Tyagi said on Thursday.
He also said that it was an easy liquidity and low interest rate which was the main reason for bull rally today in the stock market.
“The initial settlement will be good for all market participants.
It is the interest of everyone,” said Tyagi while interacting with the media at an event organized by CII’s Industry Trade.
Recently, the body of the broker and several foreign portfolio investors (FPI) has gathered concerns about the implementation of the T +1 settlement cycle that intends to introduce 2022.
At present, India follows the T + 2 settlement cycle, which means trading in the Exchange resolved Two working days after trading day.
With the T + 1 cycle, trade will be completed on the next business day.
However, the T + 1 cycle at first will be optional in the shares chosen by each exchange.
Tyagi showed that the Indian market moved from T + 3 to T + 2 in 2003.
In the last 18 years, there were significant technological developments in the banking system, especially the payment and settlement systems.
Therefore, there is a need to address further settlement cycles.
Investors have the right to accept what they buy as fast as possible and “a short settlement cycle is something desired for everyone”, he said.
Speaking of market steps towards a tighter margin norm, Tyagi shows that FPI has been traded in the derivative segment since 1999, where the payment of the face in advance is the norm.
And when investing in IPO, foreign funds must keep their money blocked for seven-eight days.
The SBI head said that the new margin norm was in everyone’s interest.
For regulators, one of the main reasons to move towards tighter margin norms is that he wants to ensure investor money should not be used to pay margins for others or for exclusive trade by the broker.
Previously, during his speech at the conference, the Chairperson said that a strong margining system was a necessity to ensure fair, transparent and reliable trade and, in recent months, regulators further strengthened margining provisions.
“This improvement has held a trade system and clearing well in the current scenario of increased turnover and participation of individual investors on the market.” Asked about his reaction to RBI comments in his annual report that there was a bubble in the Indian stock market, especially because the assessment would be Haywire, the head of the Semi showed that the record of the amount of liquidity and interest rates was very low was the main driving force for this bull rally that did not take place globally .
“How excess liquidity in the system will be managed by the central bank, including the time and release rate? The inflation rate is another factor to watch,” said Tyagi.
In India, managing liquidity and interest rates is the responsibility of the central bank and not from Sebi.