INSUBCONTINENT EXCLUSIVE:
Currently, trades are settled in two working days (T+2).New Delhi: India's stock exchanges and other market-related institutions will
switch to trade date plus one day (T+1) settlement cycle in a phased manner from February 25 (Friday)
Once the T+1 system comes into force, the trade-related settlements will require to be cleared within a day of the actual
transaction.Currently, trades are settled in two working days (T+2)."The settlement cycle will be implemented in a phased manner and will
apply only to the bottom 100 companies starting February 25, and from March 2022 onwards, the next bottom 500 stocks will be available for
allowed exchanges to introduce the T+1 cycle
The market regulator had last shortened the settlement duration from T+3 to T+2 in April 2003."Settlement marks the official transfer of
securities to the buyer's account and cash to the seller's account
Indian stock exchanges follow T+2 days settlement
For example, a trade executed on Monday would typically settle on Wednesday," said Anupam Agal, Head Operations and Legal, Motilal Oswal
Financial Services."T+1 should be a good move making settlement cycle shorter reducing margin requirement for clients with margin blocked
for just 1 day, thereby increasing retail participation and investments coming to equity markets," he added.Mr Agal also said the T+1
settlement system will reduce the "risk of pay-in/pay-out defaults, lower margin requirements and give investors more liquidity with the
availability of funds and securities."
