She said on Monday that the regulator is working on quick settlement mechanisms in collaboration with several parties. This comes amid financial gains from technology-based regulatory measures undertaken by SEBI, Buch said.
She highlighted that Indian securities markets have moved from T+2 to T+1 and the technology stack available today can bring a system that can settle transactions instantly with institutions receiving cash and securities.
“In the cash equity segment where T+1 exists, we believe instant settlement is possible.”
According to them, the regulator’s activities over the years have allowed Rs 3,500 crore in the market on an annual basis. However, this is only the interest value or time value of the freed money; The actual amount involved is much higher, she said.
In FY2023, the blocked amount mechanism supported by the primary market application will free up Rs 260 crore, in interest value alone. “But when we switch to ASBA for trading in the secondary market, the gain is almost 10 times higher,” she said.
In March 2023, SEBI approved an ASBA-like facility for the stock market, which ensures that money from the investor is moved only when a settlement takes place.
Assuming every client chooses to use this system across segments, it could free up up to Rs 2,300 crore in a financial year out of the Rs 58,000 crore margin they reported in that financial year. This is only considering qualified stockbrokers and the number will go up once it is extended to other stockbrokers, she said.
The introduction of T+1 settlement mechanism in the equity cash segment is another technical step that has greatly benefited the ecosystem, she said. SEBI had introduced T+1 settlement mechanism on an optional basis in February 2022. The transition was completed in January 2023. 9,900 crore has freed up Rs 700 crore annually in interest value.
In the mutual fund segment, investors also benefited from reduction in redemption period to T+3. Assuming that the amount involved in equity and hybrid schemes in FY 2023 is Rs 24 lakh crore, the annual gain for investors is Rs 230 crore.