Introducing Optional T+0 and Instant Settlement: Powering Growth in Indian Securities Markets

 

Breaking Ground: SEBI Unveils Beta Launch of Optional T+0 Settlement

Please do look out for more information from your Stockbroker.

In case, your Stockbroker is not part of the beta launch, do get in touch with your stockbroker to see if they can be part of the beta launch.

Or other option is to option a trading account with the Stockbrokers who are part of the Beta launch.

The choice is yours

Revolutionizing Trading: SEBI's Beta Launch of Optional T+0 Settlement

In recent years, India's securities markets have experienced remarkable growth, with soaring volumes, values, and participant numbers.

This dynamic expansion underscores the need for continual efforts by regulatory bodies like SEBI to elevate market efficiency and safety, particularly for retail investors.

With an unwavering commitment to progress, SEBI is unveiling the introduction of optional T+0 and instant settlement cycles alongside the existing T+1 settlement cycle for the equity cash segment.

Driving Innovation: SEBI's Beta Launch Paves the Way for Instant Settlement

Driving Forces and Vision

 

SEBI's vision is anchored in collaboration and innovation, aiming to harness insights and feedback from stakeholders and the public to usher in these transformative settlement options.

Building upon past strides in shortening settlement cycles, which evolved from T+5 to T+2 and then to T+1 by 2023, SEBI now seizes the opportunity to further accelerate clearing and settlement processes amidst advancements in payment systems and technology.

Accelerating Progress: SEBI's Beta Launch of T+0 Settlement Redefines Efficiency

Features Galore: T+0 and Instant Settlement

The proposed mechanisms promise an array of benefits:

- Instant receipt of funds and securities compared to the T+1 settlement, amplifying market liquidity and agility.

- Mitigation of settlement shortages and curtailed risk exposure for market participants and clearing corporations, fostering a safer trading environment.

- Enhanced investor safeguarding through direct crediting of funds and securities into clients' accounts, with a special emphasis on leveraging UPI facilities.

- Elevated operational efficiency and market appeal of Indian securities as a premier asset class, harmonizing with contemporary investor preferences for reliability, cost-efficiency, and swift transaction processing.

 SEBI Leads the Way: Beta Launch of T+0 Settlement Signals Market Evolution

 

Embracing Opportunities, Addressing Concerns

While these options unlock a plethora of advantages, SEBI remains attuned to potential concerns, including liquidity fragmentation, heightened trading costs, and price divergence between settlement cycles. However, SEBI is poised to mitigate these challenges through strategic interventions, such as leveraging arbitrage opportunities, implementing price bands, and phasing in the implementation to solicit ongoing stakeholder feedback.

 

SEBI's Resolute Decision

 

In a testament to its forward-looking approach, SEBI convened its 204th Board meeting in Mumbai on March 15, 2024.

Among the pivotal decisions made, one stands out - the resounding approval for the launch of a Beta version of optional T+0 settlement.

 

With a spirit of collaboration and foresight, the Board greenlit the rollout of a Beta version of optional T+0 settlement.

This bold initiative signals a monumental leap forward in revolutionizing the Indian securities market, propelling it into a new era of efficiency and competitiveness.

The initial rollout will encompass a select set of 25 scrips, with participation restricted to a curated group of brokers.

 

Pioneering Progress, Ensuring Success

SEBI underscores the paramount importance of ongoing stakeholder consultation and user feedback.

Consequently, the Board will vigilantly monitor the Beta version's implementation progress, conducting comprehensive reviews at the three-month and six-month marks post-implementation.

Armed with insights gleaned from these assessments, SEBI remains steadfast in its commitment to charting a course toward sustainable growth and prosperity in the securities ecosystem.

 

A Brighter Future Beckons

The introduction of optional T+0 and instant settlement cycles heralds a dawn of optimism and advancement in Indian securities markets.

By instilling swifter, more streamlined clearing and settlement processes, SEBI not only enhances market allure but also fortifies investor confidence, laying a robust foundation for enduring prosperity and vitality in the securities landscape.

 

 

 

 

 

Disclaimer: These are my personal thoughts only. The bottom line is Spreading the Joy of Safe ePayments.

 

Safe and Stylish: Unveiling World SafeePay and Blouse Day Delights

 

The need for observing World SafeePay Day and World Blouse Day arises from the absence of dedicated global celebrations for these concepts.

World SafeePay Day aims to celebrate the joy of safe electronic payments in all financial transactions, representing an abstract celebration that highlights the significance of secure and efficient digital financial interactions.

As the world increasingly relies on electronic payment systems, having a designated day for SafeePay emphasizes the importance of secure and reliable digital financial transactions.

 

On the other hand, World Blouse Day seeks to celebrate the joys of wearing blouses in a more lively and visually impactful manner.

The concept involves a powerful display of togetherness, with millions of people stepping out wearing blouses based on a chosen theme.

This display celebration not only promotes a sense of unity but also serves as a unique and creative expression of shared identity through clothing.

 

The introduction of these days aligns with the United Nations' approach to designating specific days to raise awareness, promote action, and celebrate achievements related to various global issues.

While international days often focus on serious matters, World SafeePay Day and World Blouse Day offer a mix of abstract and lively celebrations, catering to the diverse interests and aspects of modern life.

In a world where electronic transactions and cultural expressions are integral parts of daily living, these designated days would contribute to fostering awareness and appreciation for safe ePayments and the joy of wearing blouses.

 

 SafeePay's joy, transactions secure,

World Blouse Day, colors allure.

Digits dance, a digital delight,

Blouse themes bloom, in unity's light.

 

Welcome to 2024: Embarking on a New Era of Stock Trading Excellence! SEBI's n NPCI’s UPI ASBA Initiative for secondary market trades.

 

Revolutionizing Stock Trading: SEBI's and NPCI’s UPI ASBA Initiative and QSBs Propel Investors into a Future of Secure and Seamless Transactions!"

🌐 Breaking News: QSB Designation and UPI Revolution in Secondary Market! 🚀

In the dynamic landscape of financial markets, 2024 marks a pivotal moment as we witness groundbreaking changes orchestrated by the Securities and Exchange Board of India (SEBI).

With a visionary approach, SEBI introduces the UPI ASBA initiative, leveraging the power of the Unified Payments Interface for Share Secondary Market.

This transformative move aims not only to streamline transactions but also to enhance security and efficiency.

 

As we step into this promising year, the designation of 15 Stockbrokers as Qualified Stockbrokers (QSBs) adds another layer of reliability to the financial ecosystem.

These industry leaders, including Zerodha, Angel One, HDFC Securities, and others, are entrusted with additional responsibilities in financial stability, audit, related-party transactions, cyber security, and risk management.

The regulatory commitment intensifies with enhanced monitoring set to commence on July 1, 2023 ensuring a robust and accountable trading environment.

 

The transition to UPI ASBA signifies a paradigm shift in user-friendly transactions.

Pioneered by QSBs like Groww, the activation of UPI ASBA for Share Secondary Market promises a seamless experience for investors.

The forthcoming beta run will provide valuable insights, allowing for strategic adjustments and fine-tuning.

 

In this symbiotic relationship between stockbrokers and banks, readiness is paramount. The collaborative efforts of both entities ensure the full potential of UPI ASBA is harnessed. Regulators, post-beta run, may play a crucial role in ensuring the preparedness of banks, aligning with the evolving needs of the financial landscape.

 

The unveiling of building blocks, starting with the RBI's announcement of single-block-and-multiple debits in UPI, highlights a comprehensive approach towards a technologically advanced and secure trading environment.

The UPI ASBA feature, a result of these building blocks, simplifies various transactions, offering unprecedented ease in e-commerce, securities investments, hotel bookings, and more.

 

As we eagerly anticipate the Beta launch of 'UPI for Secondary Market,' led by Groww and supported by key stakeholders like BHIM, YES PAY NEXT, and others, the financial landscape is poised for positive disruptions.

Initially accessible to HDFC Bank and ICICI Bank customers, this collaborative effort ensures a robust implementation.

 

In conclusion, as we welcome 2024, investors, brokers, and stakeholders are invited to embrace this change and be part of a historic transformation in Indian secondary market trading. SEBI's circular and the imminent UPI for Secondary Market not only promise enhanced security and streamlined processes but also herald a new paradigm in financial transactions.

Welcome to a year of possibilities and positive shifts in the world of stock trading!

 

📆 Key Circular Announcement:

On June 23, 2023, SEBI (Securities and Exchange Board of India) made a historic announcement through circular SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/99, ushering in a transformative era in secondary market trading.

This directive, directed towards Recognized Stock Exchanges, Clearing Corporations, Recognized Depositories, and the National Payment Corporation of India (NPCI), introduces an innovative UPI block facility aimed at enhancing investor protection.

 

🔄 Transition to UPI ASBA:

QSBs are expected to spearhead the activation of UPI ASBA (Unified Payments Interface Application Supported by Block Amount) for Share Secondary Market, introducing a new dimension in user-friendly transactions.

While trailblazers like Groww lead the way, other QSBs are poised to follow suit in the coming months. Strategies may undergo refinement based on insights garnered from a meticulous beta run, ensuring a seamless transition.

 

🏦 Banks and Brokers Symbiosis:

A pivotal note underscores the symbiotic relationship between stockbrokers and banks. The preparedness of both entities is paramount; if banks are not adequately prepared, stockbroker account holders won't be able to fully leverage the potential of UPI ASBA. Regulators, post-beta run, may play a role in nudging banks towards readiness.

 

🔗 **Building Blocks Unveiled:

This transformative journey unfolds as a sequence of building blocks. The Reserve Bank of India (RBI) laid the foundation in December 2022 with the announcement of single-block-and-multiple debits in UPI. Each subsequent announcement contributes to a comprehensive ecosystem, ensuring a smooth transition towards a technologically advanced and secure trading environment.

 

🚀 **UPI ASBA Feature Unveiled:

The UPI ASBA feature, leveraging single-block-and-multiple debits functionality, was unveiled by the RBI, marking a paradigm shift in payment systems. Earmarking funds for debits simplifies various transactions, including e-commerce, securities investments, hotel bookings, and more.

 

💡 **Beta Launch and Stakeholder Collaboration:

The upcoming week heralds the Beta launch of 'UPI for Secondary Market,' initially focusing on the equity cash segment.

This launch is a collaborative effort, with key stakeholders such as clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers actively contributing to its success.

During the Beta phase, a select group of pilot customers will experience this functionality, enabling them to block funds in their bank accounts.

Clearing Corporations will then debit these funds upon trade confirmation during settlement, streamlining the process and ensuring a swift payout on a T+1 basis.

 

The Beta launch of 'UPI for Secondary Market' is imminent, led by Groww, supported by BHIM, Groww, and YES PAY NEXT.

Initially accessible to HDFC Bank and ICICI Bank customers, this collaborative effort ensures a robust implementation. Key stakeholders, including Zerodha, Axis Bank, and Paytm, are gearing up for certification and active participation in the Beta launch.

 

🔄 Integration Challenges and Solutions:

The Beta run prompts critical questions about the potential contribution of 'UPI for Secondary Market' to overall UPI volumes. The initial phase grants access to UPI through UPI Screens for HDFC Bank and ICICI Bank account holders. However, a crucial step for full UPI benefits is holding an account with the Groww brokerage app.

 

The QSB list includes Zerodha, Angel One, 5paisa Capital, HDFC Securities, ICICI Securities, IIFL Securities, Jainam Broking, Kotak Securities, Motilal Oswal Financial Services, NextBillion Technology, Nuvama Wealth and Investment, Sharekhan, Anand Rathi Share and Stock Brokers, RKSV Securities, and Globe Capital Market

In summary, SEBI's circular sets the stage for a transformative shift in secondary market trading, with the UPI block facility poised to redefine security, efficiency, and investor protection.

As the countdown to January 1, 2024, begins, the financial landscape is on the brink of a new era. Investors, brokers, and other stakeholders are encouraged to embrace this change, heralding an era of enhanced security and streamlined processes in the Indian secondary market.

 

Contextual Expansion: SEBI Circular and UPI for Secondary Market:

 

On June 23, 2023, the Securities and Exchange Board of India (SEBI) issued a pivotal circular, SEBI/HO/MRD/MRD-PoD-2/P/CIR/2023/99, signaling a groundbreaking shift in the landscape of secondary market trading.

This circular, addressed to all Recognized Stock Exchanges, Clearing Corporations, Recognized Depositories, and the National Payment Corporation of India (NPCI), outlines a strategic move to enhance investor protection and streamline trading processes.

 

Introduction of UPI Block Facility:

The core objective of this circular is to introduce a supplementary process for trading in the secondary market, mitigating risks associated with defaulting trading and clearing members.

SEBI has ingeniously devised a framework wherein funds in an investor's bank account are blocked, as opposed to being transferred upfront to the trading member.

This revolutionary move aims to provide an added layer of security, known as the 'UPI block facility,' integrating the RBI-approved Unified Payments Interface (UPI) mandate service.

 

 

 

 

Key Features of the Proposed Framework:

Under this proposed framework, funds remain in the client's account but are blocked in favor of the clearing corporation (CC) until the expiration of the block mandate or its release by the CC.

Settlement for funds and securities is seamlessly handled by the CC, eliminating the need for trading members to handle client funds and securities directly.

Client Flexibility and Options:

The circular emphasizes investor empowerment, allowing the availing of the UPI block facility to be at the option of the investor.

This non-mandatory facility, to be provided by stock brokers, permits investors to choose UPI-based trading under specific brokers while opting for non-UPI trading under others.

However, once opted for the UPI block facility under a particular broker, specific guidelines must be adhered to concerning cash collaterals, equivalent collateral, securities collateral, and funds pay-in settlement.

 

Segment-wise Collateral and Settlement:

Collateral and settlement are designed to be segment-wise, requiring clients, trading members, and clearing members to transfer or reallocate collateral between segments. Running account settlement is not supported, ensuring a meticulous and daily settlement process facilitated by the CC using the UPI block facility.

 

Timelines and Implementation:

Fast forward to December 29, 2023, when SEBI's visionary approach materialized into a significant development. An ASBA-like facility, termed 'Trading supported by blocked amount in Secondary Market,' gained approval. Leveraging the RBI-approved UPI mechanism, the implementation timeline for this transformative change is set for January 1, 2024.

 

🚨 Disclaimer:

This informational expansion is based on available data and projections as of January 1, 2024. However, changes may occur based on regulatory updates and industry dynamics. Users are encouraged to verify current information and consult relevant authorities for the latest details.

 

🚀 Conclusion:

As the countdown to January 1, 2024, begins, the financial landscape stands on the brink of a new era. SEBI's circular and the imminent UPI for Secondary Market promise not only enhanced security and streamlined processes but also herald a paradigm shift in Indian secondary market trading.

Investors, brokers, and stakeholders are invited to embrace this change and be part of a historic transformation.

 

Additional Reading: Pilot phase of 'UPI for secondary market' to begin Jan 1; CRED's Kunal Shah says 'big moment for India' @

https://www.businesstoday.in/markets/top-story/story/pilot-phase-of-upi-for-secondary-market-to-begin-jan-1-creds-kunal-shah-says-big-moment-for-india-411331-2023-12-29

 

 

 

Payment Bank – The Interplay between National Securities Depository Limited (NSDL) and Application Supported by Blocked Amount (ASBA)

The Disruptive inspiration for NSDL:

          The 17,625 and new DP Service Centres can be tapped to open Saving Bank Accounts with the icing on the cake being linked Demat Accounts with minimal service charges.

          As ASBA is mandatory from January 1,2016 the float in the respective saving bank accounts will be higher as compared to float in SB Accounts of other Payment Banks.  

          What is your opinion?

          On 19^th August 2015, Reserve Bank of India announced the first set of entities that were issued “in-principle” approval to set up payments banks.

These 11 entities “in-principle” approvals will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the Reserve Bank.

On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the Reserve Bank would consider granting to them a licence for commencement of banking business.

Each of the 11 Applicants has their own set of strengths and weaknesses.

Each applicant has already commenced the brainstorming part.

Each applicant in the next six months will unveil roadmaps towards the goal of a full fledged licence to commence Banking.

Numerous articles in print and digital financial publications are trying to unravel of this Reserve Bank of India notification.

Securities Exchange Board of India (SEBI) Press Release on June 23^rd 2015 offers some pointers about NSDLs’ path towards a full fledged banking licence.  

The below SEBI Board decision will be keenly analysed by NSDL Strategy Team - Streamlining the Process of Public Issues - Obviating the need to issue cheques

          In order to reduce the post-issue timeline for listing from existing T+12 days to T+6 days, increase the reach of retail investors and reduce the costs involved in public issue of equity shares and convertibles, SEBI Board took the following decision based on ASBA popularity.

Presently more than 99.5 % applications are received from centres where ASBA facility is available. Based on an analysis of a few public issues, in terms of amount, ASBA applications account for 99.90% of the total bid amount received from all investors.

Considering the reach and advantages of ASBA, SEBI has made it mandatory for all investors to make ASBA applications.

Amongst many other significant advantages, ASBA enables investors to give the mandate for payment of application money in the application form itself without suffering loss of interest for the intervening period.

ASBA also obviates the hassle of refund of money by the issuer as per the difference in application amount and the amount for which shares are finally allotted.

In order to substantially enhance the points for submission of applications, Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) shall also be allowed to accept application forms (both physical as well as online) and make bids on the stock exchange platform. This will be over and above the stock brokers and banks where such facilities are presently available.

To help intermediaries and banks to modify their existing systems and train their staff and also enable the investors to adapt to the new system, there will be a phase-in period of 6 months. Accordingly, a public issue which opens on or after January 01, 2016 will have to follow the new system.

NSDLs promoters/shareholders are:

Promoters

• Industrial Development Bank of India Limited (Now, IDBI Bank Limited)
• Unit Trust of India (Now, Adminstrator of the Specified Undertaking of the Unit Trust of India)
• National Stock Exchange of India Limited

Other Shareholders (i.e a captive market share)

• State Bank of India
• HDFC Bank Limited
• Deutsche Bank A.G.
• Axis Bank Limited
• Citibank N.A.
• Standard Chartered Bank

Few Statistics:-

Active Client Accounts -- 1,39,47,307

Depository Participants -- 270

DP Service Centres -- 17,265

DP Geographical Coverage (Cities/Towns) – 1632