T+1 settement system would protect investors’ interest: Ajay Tyagi

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Securities and Exchange Board of India (Sebi) chief Ajay Tyagi said that the shorter settlement system (T+1) which would be implemented in a phased manner from February 2022 will go a long way in protecting the interest of the investors. The capital markets regulator has taken a slew of regulatory measures in the recent past towards investors protection, he added.

He further said that these measures also included introduction of upfront margin framewor, risk-o-meter, e-KYC and protection of client collateral through pledge-repledge mechanism.

T+1 means that market trade-related settlements has to be cleared within a day of the actual transactions taking place. Trades on the Indian bourses are presently settled in two working days after the transaction is completed (T+2).

Investors need to be wary

Earlier this month, NSE and BSE announced that they will implement the T+1 settlement cycle with the bottom 100 stocks in terms of market value from February 25.

From there on, 500 stocks will be added from the last Friday of March based on the same market value. This would continue in the months to follow.

The announcement comes on the back of Sebi permitting stock exchanges to introduce T+1 settlement cycle on any of the securities available in the equity segment, from January 1, 2022, back in September.

The chairman of the regulator cautioned investors who are gullible, against unrealistic returns in the security market. He also said that investors need to be cognizant of the risks involved in the financial product they are investing in and of their risk ability.