Understanding India’s T+0 Trading with Citi

India has set a precedent for global financial markets with its progressive approach to settlement cycles. While North America recently shifted to T+1 settlements in May 2024, India had already been operating on a T+1 cycle for over 15 months by then, showcasing its commitment to innovation. As other prominent markets like the EU, UK, and Switzerland gear up to adopt T+1 settlements, India has boldly embraced a voluntary T+0 cycle, further solidifying its position as a trailblazer in the sector.

In the latest installment of the “Where Can We Take You” series, Marcello Topa, Citi’s Head of Global Advocacy for Investor Services, caught up with Prasanna Jha, Citi’s India Head of Custody, to delve into the rollout of shorter settlement cycles, additional post-trade reforms in India, and how Citi is supporting its clientele in navigating these changes.

Citi’s rich history in India, dating back to 1902, underscores its deep roots in the country’s financial landscape. Over the years, Citi has been at the forefront of providing cash management, trade, and treasury solutions in India for more than half a century, along with post-trade solutions for over three decades. This extensive experience, coupled with close collaborations with local regulators, positions Citi as a trusted partner for clients seeking to tap into the Indian market, guiding them through the intricacies of accessing the region.

India’s transition to a T+1 settlement cycle marked a significant milestone in its financial evolution. After nearly two decades of operating on a T+2 cycle, the move to T+1 was a strategic decision aimed at enhancing efficiency and mitigating settlement duration risks. The phased implementation process, spearheaded by the Securities and Exchange Board of India (SEBI), involved a meticulous rollout plan encompassing over 5000 listed securities. By gradually introducing T+1 settlements for different batches of stocks, the regulatory body ensured a smooth transition while minimizing disruptions for investors.

Citi played a pivotal role in facilitating this transition for its clients, collaborating with regulators and stakeholders to address critical issues related to settlement operations, funding, and foreign exchange (FX). By introducing tailored solutions and operational shifts to align with the new settlement cycle, Citi helped clients navigate the changing landscape seamlessly. Additionally, an extensive education campaign comprising webinars and personalized consultations ensured that clients were well-prepared for the transition to T+1 settlements.

India’s forward-looking approach was further exemplified by the introduction of a T+0 rolling settlement cycle on an optional basis, a move that preceded many global markets. Initially launched as a beta version for a select group of securities and brokers, the T+0 cycle garnered positive feedback during its trial phase. Building on this success, SEBI announced plans to expand the T+0 cycle to an additional 500 publicly traded securities, with institutional investors set to join the fray from May 2025 onwards.

Despite initial concerns about potential price fragmentation, SEBI’s assurance that T+0 settlements will coexist with the existing T+1 cycle has allayed fears within the industry. With Citi spearheading discussions with key stakeholders and implementing necessary systems changes to facilitate a seamless transition to T+0, clients can navigate the evolving settlement landscape with confidence. By engaging with regulatory bodies and industry associations, Citi reaffirms its commitment to upholding best practices and ensuring a smooth transition for clients in the dynamic Indian market.