A shorter settlement cycle will make Indian stock markets even better than the rest
India is prepared to move to the T+1 settlement cycle as the country’s banks now offer online settlement for funds. It will substantially improve liquidity and remove the need for transactions like “Buy Today, Sell Tomorrow” The stock market in India is one of the best in the world. This may come as a surprise to many. The reasons are obvious. India has rarely contributed to financial innovations in recent times. Also traditionally India has been one of the late starters in stock market and stock market continued to follow primitive practices till the time two major changes happened, which are: 1) starting of screen-based trading , and 2) dematerialization of securities. We have often been accused of aping practices of the US and European securities market. Whatever be the fact, today India seems to have left behind some of the advanced economies in managing settlement cycle. If you do not believe it, you just need to look at the table below: Source: CISI, L