In a significant move aimed at enhancing market liquidity and reducing risk, the Bombay Stock Exchange (BSE) has announced the introduction of the T+0 trade settlement cycle for select stocks. Effective March 28, 2024, a total of 25 stocks, including prominent names like Ambuja Cements, Bajaj Auto, BPCL, Cipla, SBI, and Vedanta, will qualify for this abbreviated settlement cycle.
The T+0 settlement cycle represents a departure from the conventional T+1 cycle, wherein securities and funds transfer occurs on the same trading day. This initiative is expected to revolutionize the Indian stock market landscape by streamlining transaction processes and bolstering market efficiency.
The 25 stocks eligible for the T+0 settlement cycle have been carefully curated and published by the BSE. This curated list includes stalwarts from various sectors such as banking, automobiles, pharmaceuticals, and energy, thereby ensuring a diversified representation of the market.
Here's a comprehensive look at the complete list of stocks eligible for the T+0 settlement cycle:
Ambuja Cements Ltd.
Ashok Leyland Ltd.
Bajaj Auto Ltd.
Bank of Baroda
Bharat Petroleum Corporation Ltd.
Birlasoft Ltd.
Cipla Ltd.
Coforge Ltd.
Divis Laboratories Ltd.
Hindalco Industries Ltd.
Indian Hotels Co. Ltd.
JSW Steel Ltd.
LIC Housing Finance Ltd.
LTIMindtree Ltd.
MRF Ltd.
Nestle India Ltd.
NMDC Ltd.
Oil and Natural Gas Corporation
Petronet LNG Ltd.
Samvardhana Motherson International Ltd.
State Bank of India
Tata Communications Ltd.
Trent Ltd.
Union Bank of India
Vedanta Ltd.
The transition to a T+0 settlement cycle marks a pivotal moment for the Indian stock market, with far-reaching implications for investors, traders, and market participants alike. By facilitating same-day settlements, this initiative aims to inject greater dynamism and agility into the trading ecosystem.
It's worth noting that the adoption of the T+0 settlement cycle follows the full transition of the Indian stock market to the T+1 cycle in 2023, implemented across three phases. Building upon this transition, the Securities and Exchange Board of India (SEBI) introduced a framework for the optional beta version of the T+0 cycle, laying the groundwork for the current development.
Under the beta version of the T+0 settlement cycle, which commences on March 28, 2024, trading activities will be restricted to a select group of stocks and a limited number of brokers. Transactions executed within this cycle will be subject to specific guidelines, including trading hours between 9:15 am and 1:30 pm.
To ensure stability and mitigate volatility, trades within the T+0 cycle will adhere to a predefined price band, set at 100 basis points above or below prices observed in the T+1 cycle. This mechanism serves as a safeguard against excessive price fluctuations and market manipulation.
Moreover, with the introduction of the T+0 settlement cycle, market participants can expect a convergence of fees and charges applicable to T+0 settled securities with those of T+1 settled securities. This includes transaction charges, Securities Transaction Tax (STT), and regulatory/turnover fees, thereby ensuring a level playing field for all stakeholders.
Industry experts and market analysts anticipate several benefits stemming from the implementation of the T+0 settlement cycle. One of the primary advantages is the expedited release of funds within the market ecosystem, leading to enhanced liquidity and reduced capital lock-in periods.
According to Shrey Jain, Founder & CEO of SAS Online, “T+0 settlement would release brokers’ funds within the system, reducing overall business costs. Currently, when a client sells shares, the amount is instantly credited to their trading account, available for further trading. However, this amount is only credited to the broker after T+1 settlement. With T+0 settlement, funds would be received by 4:30 pm, freeing up brokers’ capital.”
The streamlined settlement process offered by the T+0 cycle is poised to transform the trading landscape, empowering market participants with greater flexibility and efficiency. As the Indian stock market embraces technological advancements and regulatory reforms, initiatives like the T+0 settlement cycle signal a progressive shift towards a more vibrant and resilient market ecosystem.
In conclusion, the introduction of the T+0 settlement cycle for select stocks on the BSE heralds a new era of innovation and efficiency in the Indian capital markets. By fostering same-day settlements and harmonizing trading practices, this initiative underscores the commitment towards fostering a robust and investor-friendly marketplace. As stakeholders adapt to the evolving dynamics of the financial landscape, the T+0 settlement cycle emerges as a pivotal milestone in shaping the future of India's equity markets.
