Trading In T+0 Environment In India:Regulatory Changes And Financial Implications

Abstract

Emerging Markets like India are fast becoming engines for future growth. Trading in equity shares also becomes an integral part for any country in the world and specially a growing economy in India. Trading in equity shares is one aspect of the stock markets for the investors. However, clearing and settlement is a major ecosystem in financial markets. Stock markets across the globe have had a history of long settlement periods. This system across the world has now reduced to T+2. Regulatory authorities in India have reduced this time period to T+1 and even T+0. India is currently trading in this system. This research delves into the T+0 settlement system, its regulations, its advantages and disadvantages. A questionnaire has been prepared and data collected from 224 respondents seeking their opinion about the T+0 system and its effect on liquidity. Statistical tools like Cronbach’s Alpha, McDonalds Omega, Shapiro-Wilk Test, Students T-Test, Mann-Whitney U Test and Spearman’s rho have been used to prove the hypothesis and ultimately give recommendations on the improvement in the system of T+0. T+0 is a system which is efficient enough but has its own challenges and if overcome well, it will lead to significant benefits in the stock markets.