Securities and Exchange Board of India (Sebi) has announced its approval of a pilot on T+0 settlement and relaxation of disclosure requirements for foreign portfolio investors (FPI). This move is in line with Sebi’s efforts to promote ease of doing business in India’s capital markets. In addition to this, the market watchdog has also made amendments with respect to initial public offerings (IPO) and tackling market rumors. These decisions were taken during the Sebi board meeting held recently.
The pilot on T+0 settlement is a significant step towards reducing settlement time for trades. Currently, trades are settled on T+2 basis, which means that the buyer receives the shares and the seller receives the payment two days after the transaction. With the introduction of T+0 settlement, this time period will be reduced to zero, allowing for almost instantaneous settlement. This move is expected to improve liquidity and efficiency in the market.
In addition to the T+0 settlement, Sebi has also relaxed disclosure requirements for foreign portfolio investors (FPIs). Under the new regulations, short-term debt securities, which have a residual maturity of 30 days or less, will no longer be considered as part of the FPI’s investment limit. This change aims to attract more foreign investments by providing greater flexibility to FPIs in managing their portfolios.
Furthermore, Sebi has made certain amendments with respect to initial public offerings (IPOs). The market regulator has allowed issuers to disclose their consolidated financials for the past three years instead of the current requirement of five years. This change will make it easier for companies, especially startups and small businesses, to go public and raise capital.
Sebi has also taken measures to tackle market rumors. The market regulator has mandated listed companies to disclose material information to the stock exchanges promptly. This includes information related to defaults, financial problems, legal disputes, and any other information that may impact the stock price. This move is aimed at promoting transparency and preventing the spread of rumors that can adversely affect the market.
Overall, the decisions taken by Sebi during its board meeting are expected to have a positive impact on India’s capital markets. The introduction of T+0 settlement will reduce settlement time and improve liquidity, while the relaxation of disclosure requirements for FPIs will attract more foreign investments. The amendments to IPO regulations will make it easier for companies to go public, and the measures to tackle market rumors will promote transparency and stability in the market.
