The Securities and Exchange Board of India (SEBI) hopes to move to a one hour settlement cycle as early as March and instantaneous squaring up by October 2024, SEBI chief Madhabi Puri Buch said on Tuesday on the sidelines of the Global Fintech Fest 2023, reported Business Line.
It is worth remembering that Indian stock markets moved to the T+1 settlement cycle in January. Under T+1, a client buying shares gets his shares credited to his demat account the next day. From March, this will happen within an hour.
“The technology for implementing the one hour settlement cycle already exists. The industry is working on a new technology for instantaneous settlement,” said Buch.
When system goes down
SEBI is also beefing up systems to deal with broker and exchange or clearing corporation (CC) failures. The exchanges and CCs have implemented a software as service (SAAS) model to ensure that trading continues even in the event of one exchange or CC going down.
Data of one exchange will now physically reside on the premises of the second bourse and will be updated in real time.
“So if one clearing corporation or exchange goes down, that data is taken and actually uploaded onto the software system of the second exchange,” the SEBI chief said
The regulator is also working on a mechanism that will allow clients of a broker to have direct access to the exchange to manage and close out positions in case of failure of the broker. Buch referred to these two mechanisms as nonclassical approach to cyber security.
SEBI will turn to artificial intelligence and algorithmic alerts to identify mis selling in the financial ecosystem.
“We have built algos but haven’t applied AI. We are hoping that some of our young colleagues are able to develop it inhouse,” said Buch.
