Zerodha and T+0 settlement (current rollout)
Overview
T+0 settlement refers to a securities settlement cycle in which a transaction executed on a trading day (T) is fully settled – with funds credited to the seller and securities credited to the buyer – on the same trading day, before market close or by end of the trading day. Following the completion of the T+1 settlement rollout across all equities in January 2023, SEBI initiated a pilot for an optional T+0 settlement window on the NSE and BSE.
The T+0 window is optional and runs alongside the standard T+1 settlement cycle. A client who chooses to trade in the T+0 window for an eligible stock receives same-day settlement, while a client who does not use the T+0 window continues to settle on T+1 as standard. The T+0 facility is not a replacement for T+1 but an accelerated option for clients who want or need same-day settlement.
Regulatory background and pilot structure
SEBI’s circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/97, dated 27 June 2023, introduced the T+0 settlement framework as an optional additional settlement window. The pilot began on 28 March 2024 with a limited list of 25 eligible stocks from the top-500 listed companies by market capitalisation on NSE and BSE.
The pilot was structured to allow SEBI and the exchanges to observe:
- Whether the T+0 window attracts sufficient participation to be operationally viable.
- Whether the pricing in the T+0 segment aligns closely with the standard T+1 segment.
- What challenges arise for brokers, custodians, and clearing members in operating a parallel settlement cycle.
- Whether retail participation can practically engage with same-day settlement requirements.
SEBI indicated that the pilot results would inform a potential expansion to more stocks and, eventually, possible mandatory T+0 options for a broader universe.
How T+0 settlement works
Separate trading window
T+0 trades are executed in a dedicated trading window that operates within the normal market hours. As of the pilot’s design, the T+0 window runs from 9:15 AM to 1:30 PM (IST) on trading days. Trades placed in this window by buyers and sellers who both agree to T+0 settlement are matched and settled on the same day.
The matching engine for T+0 trades is separate from the standard T+1 order book, meaning that T+0 and T+1 prices for the same stock may differ slightly, reflecting different supply and demand in each segment.
Upfront fund and securities requirement
The most significant operational difference between T+0 and T+1 for retail clients is the upfront requirement:
- Buyers in the T+0 window must have the full purchase consideration available in cash in their trading account at the time of order placement. There is no credit or margin for T+0 buy orders in the retail segment.
- Sellers in the T+0 window must have the shares available in their demat account (clear title, unencumbered) at the time of order placement. The shares cannot be sourced from an intraday buy on the same day; they must already be in the demat account.
This upfront requirement is more restrictive than T+1, where the clearing corporation allows a brief window for settlement funding. The restrictiveness is a feature, not a limitation: upfront funding eliminates counterparty risk, which is the entire point of same-day settlement.
Settlement cycle
Trades executed in the T+0 window are settled in blocks during the trading day:
- Transactions completed in the morning session are settled in an early-afternoon settlement run.
- The clearing corporation processes the net settlement obligations and completes the exchange of funds and securities before or by market close.
The precise cut-off times and settlement run schedule are specified in the exchange and clearing corporation circulars and may be adjusted as the pilot evolves.
Availability of proceeds
For a seller in the T+0 window, the sale proceeds are credited to the trading account on the same trading day (within the post-settlement period, typically by 4:00 PM to 5:00 PM). This is one full business day faster than T+1 settlement. For a buyer, the shares are credited to the demat account on the same trading day.
Eligible stocks in the T+0 pilot
The initial pilot list of 25 stocks (announced at pilot launch in March 2024) was drawn from large-cap, high-liquidity companies across various sectors. The specific list is published by NSE and BSE and updated by SEBI as the pilot progresses. Stocks eligible for T+0 settlement are identified in the Kite interface, where the T+0 window order entry is enabled.
SEBI has indicated a framework for expanding the eligible stock list in phases, with a potential extension to the top 500 stocks and beyond, subject to pilot outcomes.
Implications for Zerodha clients
Capital efficiency for active traders
The T+0 facility significantly improves capital turn for traders who actively buy and sell specific stocks. A client who sells a stock in the T+0 window receives cash on the same day, which can then be redeployed into a new purchase in the T+1 segment (or, if the new purchase is also in the T+0 window and the cash is available before cut-off, potentially in the T+0 window as well).
No partial T+0
In the current pilot design, the client must explicitly select the T+0 window when placing an order. Orders placed in the standard segment settle on T+1. There is no automatic routing between the two segments.
Price discovery differences
Because T+0 and T+1 orders are in separate order books, the price of a stock may differ slightly between the two segments at any given moment. Traders who compare quotes should be aware that the prices displayed in the T+0 window may differ from the standard T+1 price. In practice, arbitrage activity tends to keep the two prices close, but the separation is a design feature of the parallel pilot structure.
Brokerage charges
Zerodha’s brokerage structure as of the pilot launch applies the same brokerage rates (Rs 20 per executed order for equity delivery trades) to T+0 and T+1 transactions. This may be clarified or differentiated as the pilot evolves.
Comparison with the standard T+1 cycle
| Feature | T+1 | T+0 (pilot) |
|---|---|---|
| Settlement date | Next trading day | Same trading day |
| Upfront funding for buy | Not required (exchange margin) | Required (full cash upfront) |
| Upfront shares for sell | Required (via DDPI) | Required |
| Proceeds availability | Evening of T+1 | Evening of T |
| Eligible stocks | All listed equities | Pilot list (initially 25 stocks) |
| Price discovery | Unified standard order book | Separate T+0 order book |
Future direction
SEBI’s stated intent is to make T+0 optionally available for a wider range of stocks as the pilot demonstrates operational readiness. A potential longer-term extension would see T+0 available for all stocks on an optional basis, with T+1 remaining the default for clients who do not select T+0.
The ultimate direction of travel – toward near-instant settlement – aligns with the Reserve Bank of India’s broader payments modernisation agenda and with global discussions about real-time settlement using blockchain or other distributed ledger technology. SEBI has noted that T+0 using conventional clearing infrastructure is a stepping stone in this direction.
References
- SEBI Circular SEBI/HO/MRD/MRD-PoD-3/P/CIR/2023/97, “Introduction of optional T+0 settlement in the equity cash market,” 27 June 2023.
- NSE Circular, “Launch of T+0 settlement pilot,” March 2024.
- BSE Circular, “T+0 settlement pilot operational framework,” March 2024.
- Zerodha Z-Connect Blog, “T+0 settlement: same-day settlement is here,” Zerodha.com.
- SEBI, “FAQs on T+0 settlement pilot,” 2024.