India’s markets regulator said on Monday it will implement a plan to allow the settlement of equity market trades within the same day in a non-disruptive manner and hold back if there are “serious objections” from market participants.
Offshore investors were pushing back on the Securities and Exchange Board of India’s (SEBI) instant settlement plan on fears that two settlement cycles would lead to a fragmented system and add to the cost of trading, Reuters reported last month.
India transitioned to T+1 settlement, where trades are settled within a day, in January. The SEBI now plans to allow instant settlement by October next year as another option.
SEBI Whole-Time Member Ananth Narayan acknowledged that the regulator was worried the move would lead to the fragmentation of liquidity.
“If there are serious objections, we will not do it, but we are presently exploring instant settlement in a non-disruptive manner,” Narayan said at Mumbai’s The Network Forum Asia, a forum of offshore investors and custodian banks.
SEBI believes the instant settlement plan will benefit Indian retail investors and is working to reduce fragmentation risk, Reuters previously reported, citing a person familiar with the regulator’s thinking.
Narayan added that SEBI had formed a working group to ease regulations and the registration process for offshore funds under the chairmanship of a former SEBI whole-time member.
