How NSE Clearing Delivered India’s T+1 Settlement Transition

NSE Clearing Limited is the largest CCP in the world in terms of volumes cleared in Equity Derivatives segment. It clears more than 90 percent of the trades executed in Equity and Equity derivatives in India clearing volume being USD 16.5 trillion for FY 25-26. 

NSE Clearing maintains a Core Settlement Guarantee Fund of more than USD 1.38 billion to ensure seamless settlements and maintains positions, margins and collateral at client level, for more than 200 million registered investors with value of assets exceeding USD 79 billion. 

NSE Clearing operates efficient clearing and settlement processes and was the first Clearing Corporation to accelerate cash equities settlement under T+1 settlement cycle and effects direct settlements of securities to be paid out to end clients. The operations carried out by NSE Clearing are supported by highly capable and resilient in-house developed systems that manage large-scale and real-time transaction processing, clearing an average of 100 million transactions daily with peak reaching up to 300 million per day and 3.5 million settlement instructions per day. 

In February 2023, India became the first country globally to transition from a T+2 to a T+1 rolling settlement cycle for equities. NSE Clearing Limited (NCL), as the leading Clearing Corporation and a key market infrastructure institution, played a pivotal role in executing this landmark reform under regulatory guidance. At a time when several major jurisdictions are still evaluating similar transitions, India’s achievement stands as a defining global milestone in post-trade innovation. Accelerated settlement was introduced not just for efficiency in settlement but also with a view to reduce cost of trading which would accrue due to reduced margins 

The transition was implemented through a calibrated and phased approach rather than a big-bang shift. Beginning in early 2022, securities were migrated in tranches starting with those having lower market capitalisation and gradually expanding to batches of 500 securities per month. This ensured progressive adaptation across the ecosystem while maintaining stability. NSE Clearing successfully operated dual settlement cycles (T+1 and T+2) simultaneously for more than 11 months across more than 1,500 securities, ensuring seamless continuity even as settlement volumes increased significantly. 

Despite the scale and complexity, the migration was completed without operational disruption. NSE Clearing clears equity trades averaging approximately USD 10.61 billion daily under the T+1 framework, demonstrating the robustness and scalability of India’s post-trade infrastructure. 

The move to T+1 required significant re-engineering of clearing and settlement processes. Settlement timelines were compressed from two days to one, with custodian confirmations advanced from 1pm to 7:30am on T+1 day, followed by pay-in and pay-out on the same day. Importantly, NSE Clearing ensured that this acceleration was achieved without materially impacting trade confirmation timelines for custodians, particularly for foreign investors navigating time zone and currency related challenges. 

The implementation complexity was substantial, given India’s diverse and interconnected market ecosystem comprising:

• Interoperable Central Counterparties
• Three exchanges 
• Two Central Depositories
• 15 settlement banks
• More than 1,000 Clearing Members, and 
• More than 250 million investors with fully segregated accounts. 

While technology served as an enabler, the primary challenges lay in co-ordination across institutions, cross-border participation, foreign exchange conversion and redesigning legacy workflows without disruption. 

Several structural enablers supported the transition. India’s robust payment infrastructure, including 24x7 systems such as UPI and RTGS, enabled seamless fund transfers. Additionally, the availability of 24x7 foreign exchange markets facilitated efficient currency conversion for foreign investors. Pre-delivery practices under the earlier T+2 regime where a large proportion of securities were already delivered by T+1 also eased the transition. 

Certain challenges required careful management. Foreign investors operate across multiple time zones and rely on global custodians and funding cycles. Borrowing for settlement purposes is not permitted, and foreign exchange liquidity tends to be concentrated within specific time windows. The compressed settlement cycle also reduces the time available for reconciliation and exception handling, increasing operational risk if not effectively managed. 

The impact of T+1 settlement has been transformative. Faster settlement has reduced counterparty and settlement risk, improved capital efficiency, and enhanced liquidity and investor confidence. A key measurable outcome has been approximately 50 percent reduction in daily margin blocked, freeing up investor capital and resulting in an estimated annual benefit of nearly USD 37 million. 

Accelerated settlement has also delivered tangible funding liquidity benefits, particularly for retail investors. Faster realisation of funds reduces liquidity costs and improves cash flow efficiency. 

Further, improved capital efficiency has strengthened market liquidity. Liquidity providers are able to deploy capital more effectively, resulting in tighter spreads and improved market quality. 

NSE Clearing’s journey, however, does not stop at T+1. Building on this achievement, it has further advanced market innovation through the introduction of T+0 settlement in the cash market segment, enabling same day trade and settlement supported by real-time banking infrastructure and early pay-in mechanisms. This framework has been successfully extended to custodian clients in February 2025. 

In parallel, the implementation of client direct payout of securities in January 2025 where securities are credited directly to investors’ demat account marks a significant transformation in post-trade practices by eliminating intermediary risks, enhancing transparency, and strengthening investor trust with nearly three million payout transactions processed daily.