The Securities and Exchange Board of India will introduce marketwide straight through processing (STP) system for institutional transactions by July 1 to further reduce cost and time for capital market deals.

The regulator has reviewed the progress and working of STP and would make it mandatory in the market by July, Sebi chairman G N Bajpai said at a seminar on STP, organised by Financial Technologies Ltd, in Mumbai on Wednesday.

Currently, the use of STP was voluntary, under which once an order is placed for sale or purchase of securities, all further transactions including debit and credit of funds are done automatically through electronic transfers, helping to reduce cost and time.

Bajpai said as of now 10 per cent of trades were settled with the help of STP.

The transaction costs in India were lowest in the world giving overseas investors confidence about the efficacy of our markets, he said.

The overseas investors have invested in more proportions this year than before and shown strong interest in Indian equities. This was indicative of value proposition and response to some public offerings for divestment of government holding in the companies, he added.