Context

• The securities market regulator has said it is working on real-time settlement of transactions in India’s stock exchanges. 
• The announcement came after the regulator shortened the settlement cycle to trade-plus-one (T+1) from T+2.

What is meant by trade settlement?

• ‘Settlement’ is a two-way process that involves the transfer of funds and securities on the settlement date. As of now, there is a lag between trade and settlement — the settlement date is different from the trade date. 
• A trade settlement is said to be complete once purchased securities of a listed company are delivered to the buyer, and the seller gets the money.
• The current cycle of ‘T+1’ in India means trade-related settlements happen within a day, or within 24 hours of the actual transaction. The migration to the T+1 cycle came into effect in January this year.
• India became the second country to start the T+1 settlement cycle in top listed securities after China, bringing operational efficiency, faster fund remittances, share delivery, and ease for stock market participants.

What has SEBI announced now?

• SEBI has said it is working on a plan for “instantaneous” settlement of trades in the securities market.
• Same-day, or ‘T+0’, settlement of trades will be possible with the real-time payment system — Unified Payments Interface (UPI), online depositories, and technology stack.

What will change for investors with T+0?

• Under the current T+1 settlement cycle, if an investor sells securities, the money gets credited into her account the following day. Under the T+0 settlement cycle, if investors sell shares, they will get the money in their account instantaneously, and the buyers will get the shares in their demat accounts the same day.

https://indianexpress.com/article/explained/explained-economics/sebi-instant-settlement-of-trades-what-it-means-8859692/