Introduction to T+0 Trading Settlement Cycle in Indian Stock Exchanges

Illustration explaining the T+0 Trading Settlement Cycle in Indian Stock Exchanges, highlighting its benefits and eligibility criteria
Introduction to T+0 Trading Settlement Cycle in Indian Stock Exchanges

Recently, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have introduced trading in the T+0 rolling settlement cycle in the equity segment on an optional basis. This innovative settlement cycle allows for same-day settlement of trades, alongside the existing T+1 settlement cycle.

Understanding T+0 Trading Settlement Cycle:

The T+0 trading settlement cycle, colloquially known as same-day settlement, facilitates clearing and settlement of funds and securities on the day of the trade. Transactions are settled on the same day after the closure of the T+0 market, ensuring swift processing. Sellers receive funds credited to their accounts instantly, while buyers acquire securities in their demat accounts on the transaction day itself.

Benefits of T+0 Trade Settlement:

The adoption of the T+0 trade cycle is poised to offer myriad advantages to investors and the securities market ecosystem:

  • Cost and Time Efficiency: This shortened settlement cycle reduces both time and costs associated with trade settlements.
  • Transparent Charges: Investors gain clearer visibility into the charges associated with their trades.
  • Robust Risk Management: The T+0 cycle strengthens risk management within clearing corporations and the broader securities market.
  • Investor Flexibility: Faster pay-outs of funds against securities for sellers and vice versa afford investors greater control over their investments.
  • Enhanced Market Efficiency: Capital freed up by the shorter settlement cycle enhances overall market efficiency.

Securities Available for T+0 Trading:

The stock exchanges have curated a list of 25 scrips eligible for trading under the T+0 settlement cycle. Notable names include Ambuja Cements Ltd, Ashok Leyland Ltd, Bajaj Auto Ltd, and others, offering investors a diversified range of options.

Eligibility Criteria:

All investors can participate in the T+0 trade settlement cycle provided they meet the prescribed timelines, processes, and risk requirements outlined by the Market Infrastructure Institutions (MIIs).

Trade Timings and Price Band:

In the optional T+0 settlement cycle, a single continuous trading session runs from 09:15 AM to 1:30 PM, with settlement completed by 4:30 PM. Price bands operate within a range of +100 basis points from the regular T+1 market price, recalibrated after every 50-basis point movement.

Future Outlook:

SEBI has proposed the introduction of optional instant settlement in the future, further reducing the settlement cycle and augmenting market efficiency.

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