"SEBI Approves Key Reforms: Expansion of T+0 Settlement, Faster Rights Issues, and Streamlined Filing for Listed Entities"

SEBI (Securities and Exchange Board of India) has approved several significant changes aimed at enhancing the operational framework and improving the efficiency of the Indian securities market. The key highlights of the recent SEBI board meeting include the expansion of the scope of the optional T+0 settlement cycle, faster processes for rights issues, and more flexible filing and trading options for market participants.

1. Optional T+0 Settlement Cycle Expansion

SEBI has been working to introduce a faster settlement system in the Indian stock market. The T+0 settlement cycle, which refers to the settlement of trades on the same day (T+0), was launched in a beta phase earlier. After reviewing the performance and feedback from stakeholders, SEBI has decided to enhance the scope of this settlement system:

Expansion of Eligible Scrips: The number of stocks (scrips) eligible for the optional T+0 settlement will be increased gradually. Starting from the current 25 scrips, SEBI plans to phase in up to the top 500 scrips based on market capitalization.
Enhanced Flexibility for Investors: Investors will now have the option to trade in the secondary market using either the Unified Payments Interface (UPI) block mechanism, which operates similarly to the ASBA (Application Supported by Blocked Amount) system used in primary markets, or through a 3-in-1 trading facility. The 3-in-1 facility integrates a savings account, a demat account, and a trading account, making the trading process more streamlined.
Mandatory for Qualified Stock Brokers (QSBs): One of these two mechanisms (either the UPI block or the 3-in-1 trading facility) must be mandatorily offered by Qualified Stock Brokers (QSBs) to enhance investor convenience and efficiency in executing trades.

2. No Immediate Changes in F&O (Futures & Options) Market

There were no decisions taken regarding changes to the Futures and Options (F&O) segment during this meeting, despite ongoing discussions and considerations.

3. Faster Rights Issue Process

SEBI has introduced a much faster process for completing rights issues:

Completion in 23 Working Days: SEBI has streamlined the rights issue process, enabling completion within 23 working days, significantly reducing the time required for issuers to raise capital.
Flexibility for Promoters: Promoters now have the flexibility to renounce their rights in favor of specific investors, making the rights issue process more tailored and flexible. This is a significant shift that allows promoters to choose who will receive the rights, instead of allowing all shareholders the same renunciation options.

4. Single Filing System for Listed Entities

SEBI has approved the implementation of a single filing system for listed companies, allowing them to make one-time filings across all stock exchanges. This will eliminate the need for multiple filings with different exchanges, thereby reducing administrative burdens and improving efficiency for listed entities.

Conclusion

SEBI’s new measures aim to modernize the securities market infrastructure, improve settlement efficiency, provide more options and convenience for investors, and streamline the processes for listed companies and promoters. The phased increase in eligible stocks under the optional T+0 settlement, along with faster rights issue processes and the single filing system, represents SEBI’s commitment to simplifying the market and enhancing investor confidence.