INSUBCONTINENT EXCLUSIVE:
Stock exchanges will have flexibility to either offer T +1 or T +2 settlement cycle for share transactionsCapital markets regulator Sebi has
introduced an optional T +1 (Trade day plus 1 day) settlement cycle for conclusion of share transactions to enhance market liquidity
Under the T +1 guideline, stock transactions will be settled on the extremely next day and not after 2 days as is the current norm
Stock exchanges will, nevertheless, have the flexibility to either offer T +1 or T +2 settlement cycle for conclusion of share transactions
The brand-new rule will enter into force on January 1, 2022
The market regulator chose to shorten the settlement cycle on the basis of requests from numerous stakeholders
Based upon discussions with market infrastructure institutions (stock exchanges, clearing corporations and depositories), it has been
decided to supply versatility to stock market to offer either T +1 or T +2 settlement cycle, Sebi stated in a press release.A T +1
settlement cycle will indicate that, in case of share purchases, the shares will be credited into the demat account a day after the trade
In case of sale deals, the money will be credited into the account on the really next day
Under the aegis of the T +2 settlement cycle, which is presently in style, the shares or the cash are credited after 2 days.Stock exchanges
can switch to the T +1 settlement cycle on any shares after offering an advance notification of at least a month to all stakeholders,
including the investing neighborhood, Sebi stated in the circular
SEBI even more mandated that after the switchover, the stock market will have to continue with the T +1 settlement cycle for a minimum
duration of six months.If the stock exchanges want to revert to the T +2 settlement cycle, they will once again need to provide a one-month
notice to all stakeholders.Sebi likewise asked the stock market, clearing corporations and depository individuals to put systems and
treatments in location for smooth roll-out of the T +1 settlement cycle and make needed changes to relevant bye-laws, rules and guidelines.
