*Stock Market: T+1 Settlement for Bottom 100 Stocks From 25th February*
08 November 2021
Market infrastructure institutions (MIIs), including stock exchanges, clearing corporations and depositories, have decided to start the first phase of the T+1 settlement cycle from 25 February 2022.
In a release, MIIs say, "The T+1 settlement cycle will be implemented in a phased manner, and the first list of securities with T+1 settlement cycle will begin from trade date starting from 25 February 2022."
In September this year, market regulator Securities and Exchange Board of India (SEBI) allowed stock exchanges to introduce a T+1 settlement cycle from 1 January 2022 on any securities available in the equity segment.
In a circular, SEBI says, "It has been decided to provide flexibility to stock exchanges to offer either T+1 or T+2 settlement cycle. Accordingly, a stock exchange may choose to offer a T+1 settlement cycle on any of the scrips, after giving advance notice of at least one month, regarding the change in the settlement cycle, to all stakeholders, including the public at large, and also disseminating the same on its website."
However, after opting for a T+1 settlement cycle for a scrip, SEBI says the stock exchange needs to mandatorily continue with the same for a minimum of six months. "After that, in case the Stock Exchange intends to switch back to T+2 settlement cycle, it can do so by giving one-month advance notice to the market," the market regulator says. (Read: Stock Exchanges Can Offer T+1 or T+2 Rolling Settlement on Optional Basis)
Here is the schedule of securities to be transitioned to the T+1 settlement cycle will be decided as follows:
1. All listed stocks across stock exchanges (BSE, NSE and MSEI) shall be ranked in descending order based on daily market capitalization averaged for October 2021.
2. Where stock is listed on multiple exchanges, the market capitalization shall be calculated based on the stock price at the stock exchange with the highest trading volume during the period mentioned above.
3. The list of stocks and exchanges where they are available for trading shall be published on the website of all exchanges
4. Based on the ranking mentioned above, the bottom 100 stocks shall be available for the introduction of T+1 settlement, from trade date 25 February 2022.
5. Thereafter, from March 2022 onwards, on the last Friday (trade day) of every month, the next bottom 500 stocks from the listed list mentioned above shall be available for introduction to T+1 settlement. If Friday is a trading holiday, the same shall be introduced on the immediate next trading day.
6. Any new stock listed after October 2021 shall be added to the list, as mentioned in the above paras, based on the market capitalization calculated based on the average trading price of 30 days after commencement of trading.
In case, based on market capitalization, if the stock falls under the category (in terms of market capitalization) of stocks already under T+1 settlement, then that stock also becomes eligible for T+1 settlement and will be introduced in the T+1 settlement cycle on the last Friday (trade day) of next month.
7. New stock getting listed may be on account of initial public offering (IPO), corporate action or any other reason would be handled as mentioned in point (6) and the date of transition will be announced jointly by all exchanges on which the stock is available for trading.
8. Securities such as Preference shares, Warrants, Right entitlements, Partly paid shares and securities issued under differential voting rights (DVR) will be transitioned to T+1 settlement along with the stock of the parent company.
9. All other securities listed below in the equity segment of exchange will be transitioned to T+1 settlement cycle along with the last scheduled batch of securities as determined in point (6) above for transition to T+1 settlement cycle
a. Close-ended mutual fund schemes
b. Debt securities (including corporate bonds)
c. Sovereign gold bonds (SGB)
By: via @AlliesFin Serve Stock Market
