Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said on Thursday that the shortened trade settlement cycle soon to be implemented will benefit all market participants. He added that this will not lead to any fragmentation of liquidity.
Speaking at an event organized by the industry body Confederation of Indian Industry (CII), Mr Tyagi said the T + 1 (Trade plus a day) cycle will ultimately benefit all investors . The new regime will come into force on January 1, 2022.
As part of the T + 1 cycle, all transaction settlements must be cleared within one day of the transaction being completed. From now on, all transactions made on the exchanges are settled within two days of the end of the transactions.
“Early settlement will be good for all market participants. It is in everyone’s interest and the new system will not lead to liquidity fragmentation,” Tyagi said.
The comments from the head of SEBI came in the context of the brokers association expressing concern over the implementation of the shortened trade settlement cycle.
Earlier this month, SEBI had allowed exchanges to move into the T + 1 settlement cycle on a voluntary basis.