New Delhi: Capital Market Regulator Chairman Ajay Tyagi on Thursday said the T + 1 settlement cycle (trading plus one day) is for the benefit of all market participants and the new system will not lead to liquidity fragmentation.
T +1 means that settlements related to market trade need to be cleaned in one day of the actual transactions that occur.
At present, trading on the Indian stock exchange is completed in two business days after the transaction (T + 2).
“The initial settlement will be good for all market participants.
For everyone and a new system will not lead to liquidity fragmentation,” said Tyagi in an event organized by the Indian Industrial Confederation (CII).
It comes in the midst of a brokerage association that raises worries over the implementation of a shorter settlement system.
The Securities Agency and Exchange India (SEBI), earlier this month, allows the exchange to move to the T + 1 settlement cycle on an optional basis.
Until now, Sebi has introduced an optional mechanism based on, so the exchange will decide whether to implement T + 1 settlement or continue with the old T + Mechanism + 2.
The new mechanism will take effect on January 1, 2022.
This is not the first time Sebi chooses to shorten the cycle Completion.
Previously in 2002, the capital market regulator had cut the number of days in the settlement cycle of T + 5 days to T + 3 days, and then in 2003, reduced to T + 2 days.
Tyagi said that the Indian market had witnessed boom in fundraising through an initial public offering (IPO).
During the last 18 months, growth-oriented technology companies have collected around RS 15,000 Crore through IPOs.
Their submission with SBIs currently shows a pipe around Rs 30,000 Crore.
The funds raised through the IPO on the ongoing fiscal date are almost the same as what was put forward in the entire financial year 2020-21, namely Rs 46,000 Crore, he said.
The Chairperson said that the participation of individual investors in the market has increased with “leaps and limits”.
On average, around 4 new Demat accounts lakh opened per month in 2019-20, which increased to 12 lakh per month in 2020-21, he said.
Trends are increasingly emphasized during the current financial year 2021-22 – At an average of 26 Lakh’s Demat accounts have been opened per month, he added.
T + 1 Settlement System is an interest in market participants: Chairperson
