SEBI had introduced T+5 rolling settlement in equity market from July 2001 and subsequently shortened the settlement cycle to T+3 from April 2002. After having gained experience of T+3 rolling settlement and also taking further steps such as introduction of STP, it is now felt appropriate to further reduce the settlement cycle to T+2 thereby reducing the risk in the market and to protect the interest of investors.

The shortening of settlement cycle to T+2 needed co-operation, co-ordination and active support of various entities and intermediaries in the market such as stock exchanges, clearing corporations / houses, depositories and depository participants, FIIs, custodians, fund managers, brokers, etc. SEBI had held several rounds of consultation with all the market participants and based on the consensus, decided to introduce T+2 rolling settlement in Indian equity market from 1^st April 2003. The calendar of events / activities in T+2 rolling settlement would be as follows :

1. Confirmation of the institutional trades by the custodians latest by 11.00 a.m. on T+1. A provision of an exception window would be available for late confirmations. The time limit and the additional charges for the exception window would be decided by the exchanges.
2. The exchanges / Clearing House / Clearing Corporation would process and download the obligation files to the brokers’ terminals latest by 1.30 p.m. on T+1.
3. DPs shall accept instructions for pay-in of securities by the investors in physical form atleast upto 4 p.m. and in electronic form by 6 p.m. on T+1.
4. The depositories would accept the requests from DPs till 8:00 p.m. for ‘same day processing’.
5. The Depository would permit the downloading of the pay-in files of securities and funds till 10:30 a.m. on T+2 from the broker pool accounts.
6. The Depository would process the pay-in requests and transfer the consolidated pay-in files to the Clearing House / Clearing Corporation by 11:00 a.m. on T+2.
7. The Exchanges / Clearing House / Clearing Corporation would execute the pay-out of securities and funds latest by 1:30 p.m. on T+2 to the Depositories and Clearing Banks and the Depositories and the Clearing Banks would in turn complete the process by 2:00 p.m. on T+2.

The press release is being issued to give sufficient advance notice to market participants. SEBI would be issuing the necessary administrative instructions to market participants, intermediaries and exchanges shortly. We are also initiating various steps in the interim to ensure smooth transition into T+2 rolling settlement and these include --

1. Widening of scope of STP
2. Wider use of electronic fund transfer facility
3. Issue of electronic contract notes