Optional T+0 settlement kicks off today with mix of 25 stocks

List features largecaps, frequently traded and illiquid scrips; will bring cost and time efficiencies, transparency in charges, and strengthen risk management

The BSE and the National Stock Exchange (NSE) will roll out sameday settlement for the cash equity market starting today. The bourses have put out a list of 25 stocks that will be settled on the same day on an optional basis. These are all largecaps and include the likes of Ambuja Cements, Ashok Leyland, Bajaj Auto, Bank of Baroda, Cipla, Divi’s Laboratories, Hindalco Industries, JSW Steel, LIC Housing Finance, LTIMindtree, MRF, Nestle India, SBI, and Vedanta.

However, marqee stocks such as Reliance Industries, Infosys, and TCS do not figure on the list. The list features low liquidity stocks such as MRF (6month average volume of 399 shares on the BSE) alongside actively traded ones such as Union Bank (sixmonth average: 19.4 lakh shares).

SILENT ON CRITERIA

The exchanges did not spell out the criteria for selecting the stocks nor did they name the brokers who will facilitate T+0 settlement. The transition to T+1 settlement from T+2 was done in phases starting with the stocks with the least market capitalisation.

T+1 TO CONTINUE

Sameday settlement will be in addition to the existing T+1 settlement cycle and will be a precursor to instant settlement.

A shortened settlement cycle will bring cost and time efficiencies, transparency in charges to investors, and strengthen risk management at clearing corporations and in the market ecosystem, overall.

In the current T+1 system, sellers can access only 80 per cent of their funds on the sell day and get the remaining 20 per cent the next day. However, with the T+0 settlement system, sellers will have access to 100 per cent of their funds on the same day of trade, according to Samir Shah, Head of Online Business at Axis Securities.

“This will increase liquidity for investors, allowing them to quickly enter other trades without losing out on investment opportunities. The new system will reduce counterparty default risks,” said Shah.

Sameday settlement will substantially mitigate transactional risks, offering immediate and tangible value to traders and investors, said StoxBox CEO Vamsi Krishna.

SHORTER WINDOW

A shorter trading window, from 9:15 am to 1:30 pm, will be available for these 25 stocks. All investors are eligible to participate. T+1 surveillance measures will apply to stocks in the T+0 settlement cycle as well. Trading in the T+0 segment will happenwith a price band of +/100 basis points from the T+1 market price. This band will be recalibrated after every 50 basis points movement in the underlying T+1 market.

T+0 prices will not be considered in index calculation and settlement price computation. There will be no separate close price for securities in the T+0 segment. There shall be no netting in payin and payout obligations between the T+1 and T+0 settlement cycles.