Friday, January 27, 2023

Explainer: The T+1 settlement cycle that India is entering as of today

Explainer: T+1 settlement cycle India is moving into from today


Today, India becomes the second nation in the world to begin the "trade-plus-one" (T+1) settlement cycle for top-listed securities, following China.

This is meant to make things easier for stock market participants, speed up fund remittances, share delivery, and operational efficiency.

Investors like the shorter trade cycle because it builds trust between them.

In 2022, the entire transition to the T+1 settlement cycle was implemented, with the intention of incorporating additional stocks.

What exactly is "T+1" settlement?

It basically means that any transaction involving the purchase or sale of securities will show up in the investor's demat account the next day.

How it was done in the past Trade settlement used to be done on a "T+2" basis, which meant that investors' securities bought or sold would show up in their demat accounts after two days.


 Investors will have more access to liquidity as a result of the shorter settlement period, and trade and participation may rise as a result.


If a bank, particularly a large one, experiences downtime, settling trades may be difficult.

The ecosystem could be spread by capital markets that are more volatile.

Global practices

 The "T+2" settlement cycle continues to apply to the majority of international markets, including the United States, Europe, and Japan.

Implementation by exchanges In February 2022, the first phase of implementation began with 100 stocks with the lowest market capitalization. From there, stocks were gradually added month after month.

The most recent batch of stocks to enter the "T+1" cycle consists of 256 stocks in total. All of the stocks in the Nifty 50 and Sensex are included in this.

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