Indian Exchanges Move To T+0: Up Next Is Real-Time Settlement

In keeping with its intense focus on introducing cutting-edge digital infrastructure to its finance and banking systems, India in March became the first among major global financial market to implement T+0 settlement on its stock exchanges. Equity trades will now be settled on the same day they are made.

Initially, the T+0 standard is being applied to 25 large-cap, blue-chip stocks, and upon satisfactory performance, will be extended to the rest of the market. The sped-up settlement cycle is a step up from India’s previous one-day settlement system. Indian exchanges started T+1 in 2021 with a similar phase-in, starting with blue chips, and was fully implemented by early 2023.

US exchanges are transitioning to T+1 from a T+2 cycle. Even as India moves to same-day settlement, Indian regulators, exchanges, and clearing houses have already started pushing further, beta testing for real-time settlement, expected to be realized next year. Indian exchanges were previously among the earliest to move to T+2, in 2003; the eurozone only followed suit in October 2014 and the US in 2017. The EU and the UK are still evaluating a switch to T+1, with no firm date announced.

“Digitization is the main driver of the rapid strides in Indian equities and derivatives infrastructure,” says Vishal Aunchalia, a former executive at India’s National Stock Exchange, who consulted on the settlement projects. “A sophisticated payments infrastructure must be in place to enable this kind of evolution of the settlements system.” Key to enabling India’s drive for faster and ultimately real-time settlement is the lightning speed with which banking transactions are executed in India. Transfers from client to broker accounts happen instantaneously, meaning clients have funds available to them to initiate trades the instant they move money, rather than in two to three days, as remains the norm elsewhere.