Initially, shares of only 100 companies will be covered under T + 1 settlement system, these companies will be selected on the basis of market valuation.
What is T + 1 Settlement System: The T + 1 settlement system of share settlement is being implemented from today i.e. from 25th February. In the first phase, some shares will come under this arrangement. The rest of the stock will be brought under it in phases. This system will be applicable for trading of shares on both NSE and BSE stock exchanges. What is T + 1 settlement system, what are its benefits, what does it mean for investors? Let’s not know the answers to these questions.
What is a settlement system?
When you buy or sell shares, it takes some time for the money to come into your savings account or the shares in your demat account. This process is accomplished through a system called a settlement system. Currently T + 2 settlement system is applicable in India. This means that the settlement of shares is completed within 2 days from the date of purchase or sale order. We can understand this with an example. Suppose you bought a share on Monday, it will be credited to your demat account by Wednesday.
After almost 19 years, SEBI is making changes to the settlement system. Earlier, in April 2003, the T + 2 settlement system was replaced by the T + 2 settlement system. This means that it took three days for the shares to reach you. Shares will be credited to your demat account within 24 hours of the T + 1 settlement taking effect.
What are the benefits of T + 1 settlement system?
SEBI launched the T + 1 settlement system plan in September last year. In fact, many parties involved in the capital market have been demanding a reduction in the settlement cycle. After much deliberation, SEBI has decided to continue with both the settlement arrangements. Stock exchanges were given the option of adopting new measures or continuing with existing ones.
BSE and NSE issued a joint statement in this regard in November. It said they were ready to take new measures in phases from February.
Which shares will be covered under T + 1 settlement system?
Initially, shares of only 100 companies will be covered by the T + 1 settlement system. These companies will be selected on the basis of market valuation. Initially, 100 companies with the lowest value will be part of it. Then on the next Friday of each month, the shares of 500 companies will be included in this list. This trend will continue until all the shares come under the new system.
What will be the effect on you?
Since initially only 100 companies with the lowest valuation will be covered by the new system, you will only be affected if you trade penny stocks. The effect will be that the shares will be credited to your demat account the day after the order is placed. Or if you sell the shares, the money will be transferred to your savings account the next day. As the number of shares in this list continues to increase every month, the shares of all the companies will come under this system after some time. With this, the shares you buy or sell will be settled soon.
