India is moving to a T+1 settlement. India is a country of emerging markets and after China, we are only the ones who have introduced T+1 settlement.
National Stock Exchange and BSE have rolled out the T+1 settlement rules from 25th Feb 2022. Starting with select stocks and then gradually adding others to the fold.
What does it mean?
T+1 means that trade-related settlements will be done within one day of the transaction’s completion.
For example in T+1, if you buy shares on Monday, they will be credited to your Demat account by the next day, which is Tuesday.
Before Sebi introduced the T+2 settlement system in April, We followed the T+3 settlement system, meaning it took three days for shares and money to be credited to the account. Now, with the T+1 settlement system, you can expect credit of shares and money within 24 hours.
- Introducing T+1 will increase liquidity in the markets and reduce the defaults
Example: The day after you made the transaction is called the T+1 day. On T+1 day, you can sell the stock that you purchased the previous day. If you do so, you are basically making a quick trade called “Buy Today, Sell Tomorrow” (BTST). The stock is in your DEMAT account. Hence, you can be selling a stock that you own now with T+1.
- T+1 settlement system will shorten the settlement cycle by a day reducing the risk of pay-in/pay-out defaults, lower margin requirements, and giving investors more liquidity with the availability of funds and securities. Hence, for this reason, we’ll be rolling out the pre-delivery option from our platform
This was applicable from 25-Feb-2022, 83 securities from the bottom 100 stocks based on market capitalization were brought under T+1 Settlement.
From 25-Mar-22, a further list of securities was added to the T+1 settlement
As per recent circulars of NSE and BSE, w.e.f 29-Apr-2022. Hence, for this reason, we’ll be withdrawing the pre-delivery option from our platform