SEBI aims to introduce instant settlement in stock markets by FY25

Capital markets regulator SEBI is aiming to introduce instant settlement of trades on the stock exchanges by next fiscal, its Chairperson Madhabi Puri Buch said on Monday.

SEBI, which has trimmed the settlement timelines to one day after the transaction, is looking to further shorten the timeline. Instantaneous settlements are not far, said SEBI chairperson.

“Certainly, one of the things we think is not very far off is the instantaneous settlement on the stock exchange. We are currently working on that," Buch said.

The regulator is speaking to participants in the ecosystem to introduce this facility and having the same on the bourses is possible in the “not very far future," she said.

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SEBI's plans hinge on the success of the newly introduced Application supported by blocked amount (Asba) for secondary market transactions, Buch said, adding that she is confident of succeeding on the recent introduction.

"… we think that the natural next step is instantaneous settlement (after Asba for secondary markets). Will it (instantaneous settlement) be completed by this financial year? Not sure, could be. But it may spill over to next year as well," the chairperson said.

The investment banker-turned-regulator said timing is very important in the capital markets, and delays can impact capital formation in the economy as well, which is Sebi's core mandate.

Over a period of time, Sebi has been working on reducing the time taken for clearing equity issuances, new schemes by mutual funds and other fund raising activities, Buch said, adding that technology tools have been the biggest help in the process.

Such interventions have accrued in monetary benefits of Rs 3,500 crore for the investor community on an annual basis, she said.

The largest benefit, calculated to be at Rs 2,300 crore has been through the creation of an Asba-like system for trading.

Sebi has been monitoring the turnaround times on many aspects and taking steps, including automating or streamlining a process, or allocating extra resources to expedite a task quicker, Buch said.

According to her, there is a need for greater coordination between the i-bankers and the regulator to help reduce the time taken for issuances further.

Clearances of applications to set up asset management companies are getting delayed because of non-compliance with net worth requirements and absence of go-ahead from other regulators, she said.

She said India is in a very good place as an economy which ups the importance of Sebi's role in aiding capital formation.

The GST collection number show that the economy is doing extremely well and the advance tax payments by corporates are also a forward looking statement by corporates on their performances, she said.

Highlighting the growth on both these fronts, Buch said the "growth of the economy is real'.