SEBI chairman Ajay Tyagi has proposed to the stock exchanges to gradually move towards real-time settlement of trades in the share market. Speaking at a FICCI conference, Tyagi said he would like the exchange to start with a trial or a pilot project for the same.
“Exchanges, through the use of block chain, should try real time settlement in the stock markets more seriously. They should go for it at least on a pilot or trial basis,” Tyagi said. He said the markets have come a long way from 45 days of settlement to the current state. As of now, settlement of trade in India’s stock markets is done on a T+2 basis.
However, how the specifics of how the system would work is still unknown. According to brokers the T+2 settlement system encourages intra-day trading but real-time settlement would most likely mean immediate payment of cash and delivery of shares. Brokers also said the idea of block-chain was vague and hence further study is required.
Jump in trade
During the lockdown period since March as the stock markets witnessed a sharp decline, retail participants sensed an opportunity and have pumped more than average funds into the markets. Tyagi noted that in a single month in June the number of new demat accounts opened jumped to around 10 lakh, which was around 5 lakh monthly during the pre-Covid-19 period.
“Such huge retail participation is not a cause of concern but small investors, mainly those who are coming into markets for the first time, should start with investments into G-secs and in a more gradual manner as it involves less risk,” he said.