The regulator is currently considering implementing the one-hour trade settlement for all investors by March of next year and is considering an additional time frame of 6 to 8 months for the instantaneous settlements.
According to a top official quoted in a report by news agency PTI, capital markets regulator Securities and Exchange Board of India (SEBI) would introduce one-hour transaction settlements by the end of current fiscal in preparation for making such operations instantaneous.
The official made it clear that speedier settlements are optional and investors can opt out amid concerns expressed by some foreign portfolio investors (FPI) on the shortening of the settlement cycles citing forex-related concerns.
The regulator is currently considering implementing the one-hour trade settlement for all investors by March of next year and is considering an additional time frame of 6 to 8 months for the instantaneous settlements.
The study states that SEBI has created a plan to help it achieve its goal of making trade settlements immediate. The roadmap, according to the official, is "from one day to one hour to instantaneous," adding that one hour settlements may be put into effect far more quickly than instantaneous ones.
According to the source, technology is already in place for one-hour trade settlements, and the market regulator is confident in it. However, additional technology development is required for instantaneous settlements.
According to the official, all investors will have access to a facility similar to Application Supported by Blocked Amount (ASBA) for secondary markets by January. After that, it will take a few more months for the one-hour cycle to take effect.
In response to investor concerns, it was emphasized that participation in the early settlement facility will be optional for investors, who can choose not to do so, and that data analysis does not suggest that if certain investors choose not to participate, there would be any issues on the trading side.
"The FPIs are free to opt out of doing that (immediately)," said the speaker. The matching data on who's trade matches with whose has also been examined. Thus, based on that information, we believe that it won't be a problem for anyone, the official was cited as saying in the PTI article.
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