Sebi asks exchanges to move to T+1 settlement cycle on an optional basis

The provisions of the circular come into effect from January 1, 2022; FPIs stare at challenges

The Securities and Exchange Board of India (Sebi) has introduced an optional T+1 settlement cycle for the markets. T+1 means that settlements will have to be cleared within one day of the actual transactions taking place.

The regulator has put the onus on the stock exchanges to decide whether they want to opt for the shorter settlement cycle for any of the listed scrips. This can be done after giving a one-month prior notice to all stakeholders.

A switch to the T+1 settlement cycle is expected to benefit domestic investors by increasing market liquidity and trading turnover while reducing settlement risk and