Markets to shift to T+1 settlement system from January 27: Report

It would allow the buyers and sellers to get shares and money in their accounts one day after the trade takes place

The Indian stock market will shift to a shorter trading cycle, T+1 settlement, on January 27. This would allow the buyers and sellers to get shares and money in their accounts one day after the trade ends, a report by The Times of India said.
 
Currently, the market follows the T+2 settlement system. Under this, the buyers and sellers get their shares and funds in the Demat account on the third working day. This includes the day of trade as well.
 
After the new rule, if an investor buys 50 shares on Monday, these will be received in their Demat account on Tuesday. A shorter settlement cycle could give the investors the freedom to trade more as the rolling of funds would be faster, the report added. 
 
Earlier, future and options (F&O) stocks were to be transitioned to the T+1 settlement in two batches, December 2022 and January 2023, according to a joint statement issued by market infrastructure institutions (MIIs) like stock exchanges, clearing corporations and depositories.
 
In September 2021, the Securities and Exchange Board of India (Sebi) permitted stock exchanges to introduce a T+1 settlement cycle from January 1, 2022, on any of the securities available in the equity segment.
 
After this, all MIIs issued a joint press release concerning the roadmap for the implementation of the T+1 settlement cycle. Accordingly, all listed stocks, across stock exchanges -- BSE, NSE and MSE -- were ranked in descending order based on daily market capitalisation averaged for October 2021.
 
In the first phase, the bottom 100 stocks were made available for the introduction of T+1 settlement, from the trade date of February 25, this year based on the ranking arrived. Thereafter, from March onwards, on the last Friday (trade day) of every month, the next bottom 500 stocks from the list of stocks ranked, are being made available for introduction to T+1 settlement every month till January 2023.
 
"To bring in operational efficiency and ease for market participants, it has been now decided that all stocks on which derivatives contracts are available will be transitioned to T+1 settlement in a single batch i.e. in January 2023 instead of two separate batches," the joint statement noted.
 
Accordingly, the stock exchanges will revise the original schedule for the transition of stocks to the T+1 settlement. 
 
(With agency inputs)