Informist, Wednesday, Nov 29, 2023

--SEBI Buch: T+0 settlement optionality won't fragment mkt liquidity

--CONTEXT: SEBI aims optional T+0 settlements in cash mkt by Mar

--SEBI Buch: Mkt liquidity fragmentation in T+0 a canard being spread

--CONTEXT: SEBI chief Buch speaking on sidelines of a G20 event

By Priyasmita Dutta and Rajesh Gajra

NEW DELHI - The Securities and Exchange Board of India foresees no problem in the rollout of optional T+0, or same-day, settlements in the equity cash market by its target date of March. Given the way SEBI expects to roll out the optionality in same-day settlements, there is unlikely to be any problem at all, Chairperson Madhabi Puri Buch told Informist on the sidelines of a G20 event here today.

Some market participants wonder if having different settlement cycles – T+1 and T+0 – for trades in the cash market will lead to fragmentation of liquidity. The liquidity fragmentation talk was a canard being spread by some market participants, Buch said in a response to a query from Informist. "It is a non-issue," she said.

Buch said the optionality part will not lead to fragmentation and "to the extent marginally if it does, there will always be arbitrageurs to close the gap between the two markets."

According to Buch, SEBI did nothing without looking at the data. In the case of same-day settlements, SEBI has satisfied itself with how the trades will be matched, she said.  End

Edited by Vandana Hingorani

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