SEBI Introduces T+1 Settlement Cycle From Jan 1 | T+2 Settlement by SEBI | New T+1 Rule

TL;DR

SEBI has introduced a new rule allowing trades to be settled within one day instead of the current T+2 settlement, bringing joy to investors and traders.

Transcript

what would give you more joy imagine you were to settle something after two days but suddenly a new rule comes and says you know what it will be settled tomorrow only you don't have to wait for two days to settle that wouldn't that be a matter of joy and which is what sebby has given to its investors and traders they have given such a good news by ... Read More

Key Insights

• 🤣 SEBI has introduced T+1 rolling settlement on an optional basis, allowing trades to be settled a day in advance.
• ⌛ This rule aims to reduce the waiting time for settlement and bring more efficiency to the market.
• 💨 Investors and traders will benefit from faster reflection of bought shares in their trading accounts and a quicker withdrawal process.
• 🥳 The new rule also allows eligibility for splits, bonuses, and dividends with a position taken on the previous day.
• 🤝 The T+1 rule applies to all transactions, including block deals.
• 🈷️ Exchanges must give one month's notice before implementing the T+1 rule and can switch back to T+2 after a minimum of six months.
• 📏 The potential conflict between exchanges following different settlement rules is yet to be addressed.

Questions & Answers

Q: What is the significance of SEBI introducing T+1 rolling settlement?

The introduction of T+1 rolling settlement means trades will be settled a day in advance, benefiting investors and traders by reducing the waiting time for settlement.

Q: Is the T+1 rolling settlement rule mandatory for all exchanges?

Currently, the rule is optional, but if it proves successful, SEBI may make it compulsory for all exchanges to follow.

Q: How long does it take for trades to be settled under the current T+2 rule?

Under the T+2 rule, trades typically take around 48 to 76 hours to be settled.

Q: Can exchanges switch back to the T+2 rule after implementing T+1 rolling settlement?

Exchanges can switch back to T+2, but they must follow the T+1 rule for a minimum of six months and provide a one-month notice before switching back.

Summary & Key Takeaways

• SEBI has published a circular introducing T+1 rolling settlement on an optional basis, allowing trades to be settled a day in advance.

• This new rule is not currently compulsory but may become mandatory if it proves successful.

• Previously, India followed a T+3 settlement cycle until it was changed to T+2 in April 2003.