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T+3 settlement cycle for stocks from April 02: Sebi

The Securities and Exchange Board of India on Wednesday said stock exchanges will introduce T+3 rolling cycle for all the scrips from April 1, 2002.

The new settlement system would replace the current T+5 cycle and help to reduce transaction costs for the investors, Sebi chairman DR Mehta told reporters after the meeting of the group on risk management systems for equity markets in Mumbai.

Under this system, the squaring up of share transaction would be done in three days after the trade deal.

Reserve Bank of India is working to expand the electronic transfer facility for this purpose and the group has recommended that investors should be allowed to use debit card for payment to brokers, he added.

Sebi would take up this matter with the apex bank shortly, he added.

Three months time has been provided to the exchanges and depositories for making suitable arrangements including fine-tuning of IT systems for new settlement cycle, Mehta said.

The rolling settlement on T+5 basis was introduced for 414 scrips from July 2 and the remaining listed scrips would be traded under T+5 compulsory rolling mechanism from January 2, 2002.

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