The Securities and Exchange Board of India (SEBI) is now pushing for one-hour trade settlement, likely by March 2024, and instantaneous settlement six months later. The regulator stated that the technology for implementing the one-hour settlement cycle already exists and that the industry is working on a new technology for instantaneous settlement.
In February 2022, India began the transition to a T+1 settlement cycle, becoming the first jurisdiction in the world to do so. India completed the transition in January 2023, joining China, where stocks on the exchange markets settle T+0 for securities and T+1 for cash.
For offshore portfolio managers, the question is how to book, fund and settle any foreign exchange trades within the required time frame. Next year’s move to T+1 in Canada and the U.S. is demonstrating this same challenge in reverse, writes the Investment Industry Association of Canada (IIAC).
A recent article, T+1 Cycle Exposes Market to FX Settlement Risks, indicates demand for outsourcing currency management and execution will grow globally as not all firms will resort to night desks or offshoring staff to manage the critical processes around FX booking and trade affirmations in the move towards accelerated settlements.