Decoded: Why Sebi wants to shorten trade settlement cycle to a day

The Securities and Exchange Board of India (Sebi), the country's capital markets regulator, has revived a plan of shortening the trade settlement cycle. Here is explanation of what the plan aims to achieve.

What is the current settlement cycle?

All cash segment trades are presently settled on the so-called T+2 basis. When you buy a security, it reflects in your demat account after two days. 

What is Sebi targeting?

The regulator wants to reduce the trading settlement cycle to the next day, or T+1. Sebi, in 2013, put out a discussion paper called ‘Risk Management--Safer Markets for Investors’ that discussed