Securities and Exchange Board of India (SEBI) chairman Ajay Tyagi on Thursday said that the soon to be implemented shortened trade settlement cycle will benefit all market participants. He added that it will not lead to any liquidity fragmentation.
Speaking at an event organised by the industry body Confederation of Indian Industry (CII), Mr Tyagi said that T+1 (Trade plus one day) cycle will ultimately benefit all investors. The new regime will come into effect from January 1, 2022.
Under the T+1 cycle, all trade related settlements are to be cleared within a day of the transaction having taken place. As of now, all trades conducted on stock exchanges are settled within two days after the completion of the transactions.
"Early settlement will be good for all market participants. It is in the interest of everyone and the new system will not lead to fragmentation of liquidity," Mr Tyagi said.
The SEBI chief's comments have come in the backdrop of the brokers' association expressing their concern over the implementation of the shortened trade settlement cycle.
Earlier this month, SEBI had allowed exchanges to move to the T+1 settlement cycle on an optional basis.