Steps Taken by SEBI to Improve Risk Management Procedures in Indian Stock Market. SEBI Proposes New T+1 Settlement Scheme for Stock Market
The Securities and Exchange Board of India (SEBI) recently proposed a new T+1 settlement scheme for stock transactions in the Indian stock market in a draft for public comment. Under the proposed settlement scheme, stock transactions will be completed within one business day. The SEBI has just released a new draft settlement scheme for trading stocks under the Indian stock markets, called T+1 day settlement. This new draft is available to the public for comment and feedback, and is intended to bring greater efficiency to the Indian stock exchange.
The proposed T+1 settlement cycle will bring much needed efficiency and liquidity to the Indian stock market. It will reduce settlement risk and reduce financial intermediation costs. It will also help to lower the capital gains tax liability of stock investors.
The T+1 settlement cycle will enable stock investors to be more informed and make better decisions regarding their investments. They will be able to plan their investments and receive profits on their investments more quickly. This will also be beneficial to institutional investors and corporations that are actively trading in the Indian markets.
Under the proposed scheme, the trading of securities will take place on the trading day with the settlement due within one business day. The settlement will take place in the clearing houses, where the securities and funds will be settled and settled obligation of traders to their respective net positions will be calculated.
The SEBI has set out certain guidelines for the implementation of the T+1 settlement scheme, such as rules relating to clearing, settlement, and the functioning of the clearing houses. The SEBI has also specified the guidelines for market participants including brokers, clearing members, trading members, and investors.
The SEBI has put in place a framework for the successful implementation of the T+1 scheme. This includes enhancing capital market infrastructure, promoting transparency in trading, improving reporting practices and risk management procedures, and enforcing meaningful penalties and sanctions on errant market participants.
The implementation of the T+1 settlement scheme will help India move towards becoming an efficient and transparent stock market. It will help to minimize the financial risks associated with stock trading and make India an attractive destination for global investors.
In conclusion, the proposed T+1 settlement cycle by SEBI will bring efficiency, liquidity and transparency to the Indian stock market. It will reduce the settlement risk and lower financial intermediation costs. It will also help to reduce the tax liabilities of investors. The SEBI has put in place a framework to ensure the successful implementation of the scheme. This includes enhancing infrastructure, promoting transparency in trading, and improving reporting systems and risk management procedures. The implementation of the T+1 scheme has the potential to make India an attractive destination for global investors and reduce the financial risks associated with stock transactions.
Author Bio
