Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Everything You Need to Know About the T+0 Settlement Cycle

1 min read

Introduction to T+0 Settlement Cycle

The T+0 settlement cycle marks a significant evolution in the Indian stock market, offering a more efficient trading environment by enabling the transfer of securities and funds on the same trading day. This initiative is set to run alongside the existing T+1 settlement cycle, fostering increased liquidity and minimizing market risk.

What is T+0 Settlement?

T+0, or Trade + 0 days, refers to the settlement of trades on the same day they are executed. Unlike the traditional T+1 cycle, where transactions are settled the next day, T+0 promises immediate settlement, enhancing the speed and efficiency of trading activities.

The Launch of T+0 Settlement

The Bombay Stock Exchange (BSE) announced the introduction of a beta version of the T+0 settlement, scheduled to start on March 28, 2024. This move follows the Securities and Exchange Board of India (SEBI)’s directive, aiming to test the waters with a select list of 25 scrips, including majors like Ambuja Cements, Bajaj Auto, and State Bank of India, among others.

List of Stocks Available for T+0 Settlement (Beta Version)

S.No.Company Name
1Ambuja Cements
2Ashok Leyland
3Bajaj Auto
4Bank of Baroda
5Bharat Petroleum Corporation Ltd
6Birlasoft
7Cipla
8Coforge
9Divi’s Laboratories
10Hindalco Industries
11Indian Hotels
12JSW Steel
13LIC Housing Finance
14LTIMindtree
15MRF
16Nestle India
17NMDC
18Oil and Natural Gas Corporation
19Petronet LNG
20Samvardhana Motherson International
21State Bank of India
22Tata Communications
23Trent
24Union Bank of India
25Vedanta

Why the Shift to T+0?

The transition towards a T+0 settlement cycle is driven by the need to enhance market efficiency and liquidity. It also addresses the competitive pressure from alternative trading mechanisms, such as cryptocurrencies, ensuring that the regulated market remains attractive to investors.

How Will T+0 Settlement Work?

Initially, the T+0 cycle will be optional and limited to a specific list of scrips and brokers. The charges applicable to T+1 settlements, such as transaction charges, Securities Transaction Tax (STT), and regulatory fees, will also apply to T+0 settlements.

Impact on the Market

The introduction of T+0 settlement is expected to boost liquidity in the market by making funds and securities available more rapidly. However, it also poses challenges, particularly for brokers’ business models, necessitating adjustments to accommodate the faster settlement process.

SEBI’s Role and Future Plans

SEBI’s proactive approach in implementing the T+0 settlement highlights its commitment to keeping the Indian stock market competitive and investor-friendly. The regulatory body has laid out a phased plan, aiming for an instant settlement cycle by March 2025, thereby pushing the envelope in trading efficiency.

The move towards a T+0 settlement cycle is a game-changer for the Indian stock market, promising to enhance liquidity, reduce risk, and make the market more competitive globally. As the beta version rolls out, it will be crucial to monitor its impact on the market dynamics and the adaptations required by market participants to thrive in this accelerated trading environment.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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