India bluechips to shift to
world's fastest settlement cycle T+1 this week
Shares of about 200 of
India s biggest listed companies are set to move to a faster settlement cycle,
making the South Asian nation the second market after China to switch to the
so-called T+1 system.
Starting Jan. 27, stocks
from Reliance Industries Ltd. to Tata Consultancy Services Ltd. and Adani
Enterprises Ltd. together comprising 80% of the country s equity market
will be settled on a trade-plus-one-day timeline versus the earlier two-day
process. The yearlong changeover gave market intermediaries time to prepare,
said Prashant Vagal, executive vice president at National Securities Depository
Ltd.
This last step in the
transition will be closely watched by foreign investors who have expressed
concern over timezone differences and consequent trade-matching failures.
Supporters of the move say faster settlement reduces counterparty risk and
trading costs.
The shift will boost
operational efficiency as rolling of funds and stocks will be faster, said
Suresh Shukla, joint president at Kotak Securities Ltd.
The US Securities And
Exchange Commission has sought stakeholder views on moving to a one-day
settlement cycle and an industry body in Europe is discussing the same.
Shortening the
settlement cycle should reduce the amount of margin that counterparties would
need to post with clearinghouses, SEC Chair Gary Gensler said in the paper.
As the old saying goes, time is money.
www.business-standard.com
dt. 24.01.2023