In today’s Finshots, we tell you why SEBI has indefinitely extended the deadline for stockbrokers to be fully ready for T+0 settlements.

But before we begin, here’s a quick note from our co-founder: “When we started Finshots, our aim was to make finance simple and accessible for everyone. Soon, we realised that understanding finance is just one of the challenges. Making smart decisions, especially around insurance, is a whole different ball game. That’s why we built Ditto, a platform that makes insurance simple. No jargon, no spam, just honest advice from advisors who are only here to help you find the right plan.”

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Now, on to today’s story.

The Story

If you even vaguely remember, two years ago we’d written about the market regulator, SEBI’s (Securities and Exchange Board of India’s) big plan to shake up how stock market trades are settled, by introducing something called T+0.

For the uninitiated, when you buy or sell a stock, the trade doesn’t wrap up instantly. Sure, your demat account shows the money you owe or are supposed to receive right away. But the actual funds and shares move only the next day. That’s what we call a T+1 settlement, where “T” is the day you make the trade and “+1” is the following day when the transaction is completed.

T+0, on the other hand, promised to make this process lightning-fast with trades settled the same day, all wrapped up by 4:30 p.m.

SEBI had launched this neat sounding plan on a pilot basis, starting with just 25 stocks in March last year, and then gradually expanding the list by 500 stocks (in phases of 100 stocks each month) from January this year. The idea was that by May 2025, most brokers would be ready for a full T+0 rollout.

But as it turns out, switching to a same-day settlement system isn’t exactly plug and play. The deadline had to be pushed to November 2025. And now, even that’s off the table. Many brokers still aren’t ready with the technology and systems needed for instant settlements. So SEBI has decided to indefinitely extend the deadline, saying it’ll announce a new one later.

So what happened to all the excitement around T+0, and why are brokers asking for more time to switch, you ask?

Well, the real reason goes a little deeper than just the surface-level “operational difficulties” everyone talks about.

And to understand what’s really going on, we need to look at a first of its kind study published in Economic & Political Weekly (EPW). The paper examined the potential impact of T+0 settlements after the first few phases were rolled out.

It tested if faster settlements really improved market efficiency and liquidity as analysts believed. The logic was that when trades settle quicker, the bid-ask spread or the tiny gap between buying and selling prices, tends to shrink. That’s because market makers, the folks who constantly buy and sell stocks, face less risk of the other side not delivering cash or shares or prices changing before a trade is completed. Less risk means tighter spreads and better prices for investors.

The researchers looked at two phases: March 2024, when 25 stocks moved to T+0, and January 2025, when another 100 out of 500 additional stocks followed, and used two methods:

1. An event study, which looked at how stock prices and trading volumes behaved around the days T+0 was introduced, and
2. A DiD approach (not Dance India Dance 😁 but “difference-in-difference”), which compared how things changed for T+0 stocks versus similar ones that stayed on T+1.

And what they found was pretty interesting.

There was early excitement when T+0 went live, but it faded quickly. And there wasn’t any lasting improvement in pricing efficiency or trading activity. In short, faster settlement didn’t really make the market more liquid. At least not yet.

Okay Finshots, so why didn’t this happen?

You see, for starters, T+0 really benefits active traders, not long-term investors. So if you’re someone who buys a stock and holds it for years, it doesn’t really matter whether the shares reach your demat account in one day or a few hours.

And that’s an important point because in India, most investors aren’t traders. They’re long-term participants. Yup! NSE’s MD and CEO, Ashishkumar Chauhan, says only a small fraction actively trade or deal in derivatives. And a survey by Research & Ranking backs this up. About 3 out of every 5 investors (roughly 60%) plan to hold their investments for at least three years.

So if the majority of the market doesn’t really need faster settlement, the demand for T+0 was bound to be limited.

Then you have to look at the other side — the brokers.

For them, moving to T+0 isn’t as easy as flipping a switch. It’s an expensive upgrade.

Under T+1, if you trade today (say, on a Friday), the exchange doesn’t settle it immediately. Everyone gets a full working day (until Monday) to sort things out. Buyers move money to their broker, sellers transfer shares from their demat, and brokers reconcile everything before sending it to the exchanges.

But with T+0, money, shares, and confirmations, all have to move within a few hours, on the same day. That demands real-time coordination, better infrastructure, and stronger back-end systems, which translates into higher costs.

All that would also mean that brokers charge a small premium for T+0, which could come up to an average of about ₹10–₹20 extra per order. But when that cost is passed on to investors, two things happen.

First, if you’re a cost-conscious investor who doesn’t trade often, you might feel the faster settlement isn’t worth the extra money. You’d rather save that fee since you don’t need instant credit or delivery anyway.

Second, if a lot of investors feel that way, fewer people end up using T+0. And when participation stays low, trading volumes remain thin. That means brokers don’t get the extra liquidity they were hoping for, which makes the whole exercise less profitable.

The proof is in the pudding. According to The Hindu Businessline, nearly a year after T+0 was introduced, the NSE and BSE have seen just 83 and 56 trades respectively, worth only ₹7.1 lakh and ₹3 lakh in total.

That’s tiny.

And these low numbers raise an important question. Is it really worth the investment for brokers to upgrade their systems for T+0? After all, it’s still optional, and with such low trading volumes, the returns on that added investment seem uncertain. So, brokers find themselves in a cost-benefit dilemma: spend more to enable same-day settlement, or hold off until there’s enough demand to make it worthwhile.

So, it’s a bit of a vicious cycle, really.

In summary, brokers aren’t fully ready operationally, and many remain sceptical about whether T+0 is worth the trouble. Because of that, the benefits of same-day settlement don’t quite show up. And since those benefits aren’t visible, there are fewer takers. With fewer takers, it doesn’t make much business sense for brokers to invest heavily in it either. Round and round it goes.

So yeah, we won’t truly know how efficient T+0 can be until it’s mandatorily rolled out across all stocks.

But that again is easier said than done. No market in the world has gone fully T+0 yet. Not even the most advanced ones. And there’s a good reason for that.

It’s practically impossible for foreign investors. Same-day settlement means all trades must be pre-funded. Money has to be in place before trading begins. For global institutional investors, that’s a logistical nightmare. Time zones, currency conversions, and cross-border transfers make it nearly impossible. Compressing all that into a few hours just doesn’t work. It would not only disrupt FPI (Foreign Portfolio Investor) participation but also hurt liquidity and push up transaction costs even more.

That said, T+0 isn’t dead. It’s probably just waiting for its moment. And knowing SEBI’s track record with market reforms, it’ll probably come up with some clever workaround to solve this never-ending puzzle.

Until then…

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