Sign In
Learn bits
Economy
Mahesh

08/09/23 06:38 AM IST

One-hour trade settlement

In News
  • Securities and Exchange Board of India (SEBI), which had in July announced it was working to launch real-time settlement of trades, is now planning to implement one-hour settlement of trades first.
Trade settlement
  • Trade settlement is a critical process in the financial markets that involves the transfer of funds and securities between parties involved in a trade.
  • It ensures that the buyer receives the purchased securities, and the seller receives the agreed-upon funds.
  • In the context of securities trading, this settlement process finalizes the transaction.
T+1 Settlement Cycle
  • In January 2023, India adopted the T+1 settlement cycle, where T represents the trade date.
  • This means that trade-related settlements occur within one business day or 24 hours of the actual transaction.
  • India became the second country, after China, to implement the T+1 settlement cycle in top-listed securities.
  • This transition brought several advantages, including increased operational efficiency, faster fund transfers, prompt share delivery, and improved convenience for participants in the stock market.
Benefits
  • Under the current T+1 settlement cycle, if an investor sells securities, the money gets credited into the person’s account the next day.
  • In one-hour settlement, if an investor sells a share, the money will be credited to their account in an hour, and the buyer will get the shares in their demat account within an hour.
  • Reducing the settlement time can mitigate counterparty and market risk, enhancing overall market stability.
  • Investors will appreciate the swifter access to their funds and securities, making the market more user-friendly.
Source- Indian Express

More Related Current Affairs View All

05 May

Key objectives of caste count

'The Union Cabinet has decided that the next Census will include questions on caste to its enumeration of India’s population, for the first time in almost a century. ' T

Read More

05 May

2 new genome-edited rice varieties

'Agriculture Minister Shivraj Singh Chouhan recently released two genome-edited varieties of rice, the first achievement of its kind in the country.' These two varieties, which

Read More

05 Mar

First-ever comprehensive survey of India’s river dolphins

'Prime Minister Narendra Modi released the results of the first-ever comprehensive population estimation of riverine dolphins – Gangetic and Indus dolphins – done in In

Read More

India’s First Ai-Driven Magazine Generator

Generate Your Custom Current Affairs Magazine using our AI in just 3 steps