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Bourses to kick off T+1 settlement cycle from Feb 25 in phased manner

Thereafter, from March 2022, on the last Friday (trade day) of every month, the next bottom 500 stocks from the list of stocks by market capitalisation will be available for introduction to T+1 settlement.

By: ENS Economic Bureau | Mumbai |
November 9, 2021 2:37:29 am
This was the biggest Sensex fall in a day since April 30, 2021. Market participants say the fall may get deeper over the next couple of weeks.

Stock exchanges will kick off the T+1 settlement system on February 25, 2022, starting with the bottom 100 stocks by market capitalisation. Thereafter, from March 2022, on the last Friday (trade day) of every month, the next bottom 500 stocks from the list of stocks by market capitalisation will be available for introduction to T+1 settlement.

“Any new stock getting listed after October 2021, will be added to list based on the market capitalisation calculated on the basis of average trading price of 30 days after commencement of trading,” the stock exchanges said in a statement.

“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 February 25, 2022,” exchanges said. In T+1, settlement of the trade takes place in one working day and the investor will get the money on the following day. The move to T+1 will not require large operational or technical changes by market participants nor will it cause fragmentation and risk to the core clearance and settlement ecosystem. In case, based on market capitalisation, if the stock falls under the category (in terms of market capitalisation) of stocks already under T+1 settlement then that stock also becomes eligible for T+1 settlement and will be introduced in T+1 settlement cycle on the last Friday (trade day) of next month, exchanges said. On September 7, Sebi allowed exchanges to start the T+1 system as an option in place of T+2. If it opts for the T+1 settlement cycle for a scrip, the stock exchange will have to mandatorily continue with it for a minimum 6 months. Thereafter, if it intends to switch back to T+2, it will do so by giving one month’s advance notice to the market. Any subsequent switch (from T+1 to T+2 or vice versa) will be subject to a minimum period. A stock exchange may choose to offer the T+1 settlement cycle on any of the scrips, after giving at least one month’s advance notice to all stakeholders, including the public at large. “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 parent company,” exchanges said.

Foreign investors had earlier written to Sebi and the Finance Ministry about operational issues they would face while operating from different geographies.

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