Sebi Chairperson Madhabi Puri Buch on Monday India is the first major economy to move to T+1 for all shares and this is path-breaking. She also said the capital markets regulator is working on instant transaction settlement in the stock markets.
The Indian share market fully shifted to a shorter (T+1) trading cycle from January 27, making the country the first in the world to do so. Before that, the domestic equity market followed the T+2 settlement cycle, which means if you buy a share on Monday, it will be credited into your demat account on Wednesday (T+2). With the T+1 trading settlement system from January 27, investors will be able to get the shares in their demat accounts and sell them the next day (Tuesday, in this case).
Addressing the media on Monday, Buch said the day is not far off when stock market transactions will be settled instantaneously. She said the regulator is working with stakeholders to improve the timelines on transaction settlement towards this goal.
The regulator has been working on upping the pace of new equity issuances, debt issuances, and approvals for mutual fund schemes using technology and other interventions with the aim of helping capital formation in the economy, she said.
Such interventions have accrued monetary benefits of Rs 3,500 crore for the investor community on an annual basis, she added.
The investment banker-turned-regulator said India is in a very good place as an economy which ups the importance of Sebi’s role in aiding capital formation.
The GST collection number shows that the economy is doing extremely well and the advance tax payments by corporates are also a forward-looking statement by corporates on their performances, she said.
Highlighting the growth on both these fronts, Buch said the “growth of the economy is real”.
“We had a consultation paper out on tracking UPSI, we realised that there will be more UPSI events… so a good trading plan is all the more essential. By the end of August we should have a consultation paper soon… to make this trading plan easier,” Sebi chief said.
On delisting norms, Sebi chief Madhabi Puri Buch said that before December, there might be a consultation paper out. Currently, Sebi has a reverse book building and the moment you touch 90 per cent, “you arrive at a price… the industry has been telling us that they have found certain problems there”.
In reverse book building, the concern is that certain constituents in the market, in anticipation of delisting, acquire those shares in a concerted bid to cross 10 per cent so that they are not able to cross the 90 per cent, “and then to cross the 90 per cent, the price is jacked up… which is unsustainable”.
“It is a question of looking at the bids and seeing what happens to the bids as it comes closer to the delisting,” Buch said, adding, “Sometimes, there is a difference between an investor getting a fair value and extracting more value… we need to balance out the requirements of both.
On REITs and InvITs, she said, “We think this is a very, very important mode for capital formation in markets going forward.”
(With Inputs From PTI)
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