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Trade settlement in Indian stock market going T+1 way

Trade settlement T+1: In share market buying and selling of stocks occurs everyday. The settlement of these transactions was previously done on t+2 basis meaning the price for the stocks that were sold were credited in the accounts of traders two days after the trading was done. This system has now been changed to T+1 […]

Edited By : Divya Richa | Updated: Jan 28, 2023 10:18 IST
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Trade settlement T+1: In share market buying and selling of stocks occurs everyday. The settlement of these transactions was previously done on t+2 basis meaning the price for the stocks that were sold were credited in the accounts of traders two days after the trading was done. This system has now been changed to T+1 basis after nearly 20 years.

This is going to be a milestone in the history of trading in stock markets in India and is expected to boost the volumes of the trade to higher level. The buying and selling will be accelerated by this system.

Indian stock exchanges will use a shorter settlement cycle or T+1 regime for the final list of major equities from From January 27, which will assist lower margin requirements for clients and increase retail investment.

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T+1 (trade plus one) signifies that market trade-related settlements must be cleared within one day after the transactions. Previously, deals on Indian stock exchanges were resolved two working days after the transaction (T+2).

The stock exchanges — NSE and BSE — declared in November 2021, in a joint statement, that they will phase in the T+1 settlement cycle, beginning February 25, 2022, with the lowest 100 equities in terms of market value.

How T+1 benefit investors?

According to analysts and market professionals, a quicker trade cycle benefits investors and fosters trust. From a liquidity standpoint, the quicker trade settlement cycle bodes favourably for Indian equity markets. It demonstrates how far India has progressed on the digital road to ensuring seamless payments within 24 hours.

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First published on: Jan 28, 2023 09:50 AM IST

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