T+1 settlement from Friday
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The shorter trade settlement cycle will come into force for all the listed securities in the Indian equity market from Friday 27th January 2023.
In India, trade settlement used to take place on a ‘T+2’ basis, meaning that the stocks bought or sold by an investor will reflect in his/her demat account after a period of 2 days. However, capital market regulator Securities and Exchange Board of India decided to shorten it to ‘T+1’ following requests from various stakeholders.
Reducing the number of days for settlement will help provide better liquidity to investors and thereby enhance trade and participation.
The stock exchanges implemented the new settlement cycle in a phased manner in order to avoid any disruptions, because such a move would require changes to the infrastructure set up for brokers.
The move to shift to a shorter trade settlement cycle will be a key milestone in the history of Dalal Street.
India will be the second largest market after China to implement the ‘T+1’ settlement cycle of stocks. Most international markets such as the US, Europe are still under the ‘T+2’ settlement cycle.
“It is a good model which will help in protecting the investors’ interest,” said B Gopkumar, MD and CEO of Axis Securities.
“We think it would be better if this model develops like the IPO model, where ASBA for bank brokers is available along with the UPI method… This measure will ensure that the customer success ratio is higher since the hops in the transaction are not there,” Gopkumar said.
“The last batch that is due for getting shifted to the T+1 cycle post this expiry represent stocks with among the highest volume.
By: via Allies Fin Serve Stock Market
