Peak margin norms assure things won’t go wrong; T+1 system in interest of all: Sebi Chairman

Peak margins: SEBI gets execution right; retail investors now a bigger force than HNIs

He also stressed the need to further reduce the settlement time to ensure that margin money is kept for less time. The T+1 settlement cycle is in the interest of all market participants, he said.

The capital market regulator recently introduced an optional ‘trade day plus one’ or ‘T+1’ cycle of settlements for equities, in which once a trade is executed, the settlement will be carried out within one day as against the current system of T+2. The T+1 system will come into force on January 1, 2022.

Batting for T+1 , Tyagi said the new settlement system ensures that investors get funds in a quicker manner. He said T+1 is not expected to affect liquidity.

“T+3 settlement cycle started in 2003 and there has been a lot of advances in technology since then. T+1 ensures you get funds in a quicker manner. We would like to go in a phased manner towards T+1,” he said.

The regulator has received FPI representation on T+1 and therefore has allowed a phased transition, he added.

“T+1 settlement cycle is in the interest of all market participants. A healthy arbitrage opportunity will exist if two exchanges have different settlement cycle. We see no problem in the arbitrage, or it affecting liquidity,” Tyagi said.