A beta version of the T+0 settlement system came into effect in the stock markets from Thursday. This settlement cycle is aimed at expediting the trade settlement cycle.
As the name suggests, under the T+0 system, trades involving shares will be settled on the same day they occur, with shares transferred to the buyer’s account and funds deposited in the seller’s account on the day of the trade.
At present, trades are settled the next day under the T+1 cycle.
It may be noted that the ‘beta’ version of the shorter settlement cycle will be introduced as a pilot project, allowing exchanges to offer the system on an optional basis alongside the existing T+1 cycle in the cash market.
This will involve the coexistence of both settlement cycles, with same-day settlement available for only 25 stocks, and limited brokers permitted to offer this service.Lucknow Stock
Moreover, trading sessions for T+0 stocks will be restricted from 9:15 AM to 1:30 PM.
Under the current T+1 system, sellers might receive only 80% of their cash on the day of sale, with the remaining 20% withheld until the following day. However, with the introduction of the new T+0 settlement system, sellers will have immediate access to 100% of their cash on the day of the transaction.
The T+0 settlement cycle will have two stagesGuoabong Investment. In phase 1, trades executed up to 1:30 pm will be considered for settlement, which must be completed by 4:30 pmVaranasi Stock. Subsequently, phase 2 trading will commence at 1:30 pm and conclude at 3:30 pm, with phase 1 operations being discontinued.
The stock exchanges will initiate a truncated trading cycle for the first 25 stocks and a select group of brokers. Following a review at the three- and six-month intervals, market regulator Sebi will decide on the subsequent course of action.
The NSE T+0 settlement will include 25 eligible stocks such as State Bank of India (SBI), MRF, Hindalco, and VedantaJaipur Investment. Additionally, Ambuja Cements, Ashok Leyland, Bajaj Auto, Bank of Baroda, Bharat Petroleum Corporation Ltd (BPCL), Birlasoft, Cipla, Coforge, Divi’s Laboratories, Hindalco Industries, Indian Hotels Company Ltd, JSW Steel, LIC Housing Finance, LTIMindtree, Samvardhana Motherson International, MRF, Nestle India, NMDC, Oil and Natural Gas Corporation (ONGC), Petronet LNG, SBI, Tata Communications, Trent, Union Bank of India, and Vedanta will be included.
Similarly, under the BSE T+0 settlement, 25 stocks will qualify, including Ambuja Cements, Bajaj Auto, BPCL, Cipla, SBI, and Vedanta. Other eligible stocks encompass LIC Housing Finance, JSW Steel, Indian Hotels, Ashok Leyland, Bajaj Auto, Bank of Baroda, Bharat Petroleum Corporation Ltd, Birlasoft, Cipla, Coforge, Divi’s Laboratories, LIC Housing Finance, LTIMindtree, MRF, Nestle India, NMDC, Oil and Natural Gas Corporation, Petronet LNG, Samvardhana Motherson International, State Bank of India, Tata Communications, Trent, Union Bank of India, and Vedanta.
The implementation of this new system aims to enhance dynamism within the market. By providing funds on the same day of selling, it is anticipated to boost liquidity, enabling traders to utilise cash more efficiently.
According to market experts, the T+0 settlement cycle is likely to benefit retail investors. But the efficiency of execution remains to be seen.
Indore Investment