The stock market will go into seamless trading mode in July as straight through processing will become mandatory on a market-wide basis.
Securities and Exchange Board of India Chairman G N Bajpai has said, "We should be able to mandate it by July," adding that it would become compulsory then for all market participants. Bajpai was speaking at a conference on STP organised by Financial Technologies.
At present around 10 per cent of the total trades in the market are going through STP, but this is purely voluntary and it is mostly the institutional traders who have adopted this mode.
Bajpai said that in a review meeting held with market participants on Tuesday, most of the participants had expressed their readiness to implement STP, which is a pre-requisite to settlement on a T+1 basis.
However, for T+1 to become a success, funds settlement system also has to go real time. S Narayan, the economic advisor to the prime minister said that the Reserve Bank of India has indicated a time period of around 90 days within which Real Time Gross Settlement would be implemented.
Bajpai also said that a team of officials from the International Monetary Fund was here recently and trying to get a feel of how the Indian market has evolved and "in what state it is today." Bajpai added that the markets watchdog was on "very fast track."
Balance sheet strength of banks in India is as good as what obtains globally and they are expected to end the reporting fiscal with a sticky assets level of 2-2.5 per cent, meeting the Basle II norm on this count, said S Narayan, economic adviser to the prime minister.
"Stressed assets in the domestic financial system have been managed well. There is renewed buoyancy as the financial intermediaries have been de-stressed," he said.
To achieve a growth rate of 7-8 per cent year-after-year, Narayan underscored the importance of gross capital formation. For GCF it is vital that not only the bottomline but topline of trade, industry and services sectors also grows.
For achieving economic growth gross capital investment in the infrastructure and manufacturing sector is essential.
Over the medium-term monies from the markets should be channeled into the core sector as also growth sectors like pharmaceuticals, automobiles, light engineering, etc.
Elaborating on the 'T+1' settlement cycle, Narayan felt that it will lead to efficient/ productive utilisation of resources.