Experts believe that after T+1 settlement cycle is implemented in the Indian stock market, T+2 settlement cycle can be given to equity mutual fund investors
T+1 settlement cycle: After inducting the last set of 256 stocks on Friday this week, the Indian stock market is set to become the first in the world to have a T+1 cycle for investors. Hence, the shares sold or bought from Friday will reflect in the demat account of the investors after a period of one day, leading to faster settlement and faster liquidity for the stock market investors. However, market and investment experts believe that it may soon affect investors in other asset classes as well. He added that after the implementation of T+1 settlement cycle in the Indian stock market, such faster settlement cycle can be implemented in equity mutual funds and Exchange Traded Funds (ETFs).
Looking forward to a faster settlement cycle for mutual fund investors, Pankaj Mathpal, MD & CEO, Optima Money Managers, said, “When the equity market had a T+2 settlement cycle, equity mutual funds had a T+3 settlement cycle as mutual funds Houses invest in stocks. And they pay after receiving payment from the markets. As stock market had T+2 settlement cycle, equity mutual funds had T+3 settlement cycle. But, in Indian stock market T+ After implementation of 1 settlement cycle, we are looking forward to announce T+2 settlement cycle for equity mutual funds soon."
“For retail investors, participation in debt funds, equity funds, hybrid funds and gold through ETF offerings is becoming increasingly popular. Faster liquidity in mutual funds through ETF T+1 execution is a great advantage for investors taking the ETF route. "It will also encourage growth in ETF offerings, which are currently very low compared to markets like the US," said Divam Sharma, founder, Green Portfolio - a SEBI registered PMS provider.
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Expecting T+1 settlement cycle for ETF investors, Kartik Jhaveri, Director - Wealth at Transcend Capital said, "Currently ETFs have T+2 settlement cycle as the stock market has T+2 settlement cycle. But, The stock market is moving from Friday onwards. Completely T+1 settlement mode and hence a similar settlement cycle can be expected for ETF investors in the near future."
Started in February 2022, the T+1 settlement cycle in the Indian stock market will come into full effect from Friday this week after inducting the final set of 256 stocks, which includes all Nifty 50 and Sensex stocks like State Bank of India 9SBI. are), Reliance Industries Limited or RIL, Infosys, Tata Motors, etc.
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