SEBI Settlement Cycle: In fact, many such requests were coming to the market regulator SEBI, in which there was a demand to reduce the settlement cycle. Keeping these requests in mind, SEBI has prepared a new rule.
SEBI Settlement Cycle: Those who invest in the stock market, pay attention. Market regulator Securities and Exchange Board of India (SEBI) has extended the deadline for implementation of the T+1 (Trade+1 day) settlement cycle. This settlement cycle will now be applicable from 25 February 2022.
Markets regulator SEBI has introduced a new system of ‘T+1’ (trade and next day) on an alternate basis for settlement of buy and sell of shares. Its purpose is to increase buying and selling in the market. At present, it takes two business days (T+2) after the trading day to close the deals on the domestic stock exchanges.
T+1 was to be implemented from January 1, 2022
According to the circular issued by SEBI, the regulator has provided flexibility to the stock exchanges by giving the option of ‘T + 1’ or ‘T + 2’ for settlement time to complete the share buy-sell process. This settlement plan is for shares and is optional, meaning traders can opt for it if they want. The new rule was earlier to come into effect from January 1, 2022.
There was a demand to reduce the settlement cycle
In fact, many such requests were coming to the market regulator SEBI, in which there was a demand to reduce the settlement cycle. Keeping these requests in mind, SEBI has prepared a new rule.
SEBI has issued a circular stating that after discussions with market infrastructure institutions such as stock exchanges, clearing corporations and depositors, it has been decided that the stock exchange will have the facility to either T+1 or T+2 settlement cycle. Make any offer.
1 month prior notice
As per SEBI circular, any stock exchange can opt for T+1 settlement cycle for any share for all the shareholders. However, for changing the settlement cycle, at least one month notice has to be given.
Once the stock exchange opts for T+1 settlement cycle for any stock, it will have to continue for at least 6 months. If the stock exchange wants to opt for the T+2 settlement cycle in between, it will have to give one month’s notice in advance. The stock market will need to promote it on their website.
No difference between T+1 and T+2
However, SEBI has made it clear that no distinction will be made between T+1 and T+2. This will be applicable to all types of transactions on the stock exchange. At present, there is a T+2 settlement cycle in the country since April 2003. Before that T+3 settlement cycle was going on. Now T+1 cycle is going to be implemented.
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