T+1 settlement cycle to be implemented in a phased manner

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Bourses and other market infrastructure institutions came out with a plan for implementing the T+1 (trade plus one day) settlement cycle, wherein the mechanism will be introduced in a phased manner from February 25.

This comes on the back of Sebi permitting stock exchanges to introduce T+1 settlement cycle from January 1, 2022 on any of the securities available in the equity segment in September.

Ranking to be done on market cap

T+1 implies that all market trade-related settlements will need to be cleared within one day of the actual transactions taking place. At present, settlements on the Indian stock exchanges are settled in two working days after the transaction is completed (T+2).

A joint statement said that the settlement cycle will be implemented and will apply only to the companies in the bottom 100 companies, following which the next bottom 500 stocks will  be available for introduction to T+1 settlement.

Market Infrastructure Institutions or MIIs, clearing corporations and depositories have taken the decision.

All listed stocks across stock exchanges (BSE, NSE and MSEI) will be ranked according to the daily market capitalization averaged for month of October 2021, in a descending order.

For a stock listed on multiple exchanges, the market capitalization will be calculated on the basis of the stock’s price at the exchange with the highest trading volume during the period under the review.

The list of exchanges and stocks and their availability for trading will be published on website of all exchanges.