What is the T+0 Trading Settlement Cycle?

March 29, 2024

Recently, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have introduced trading in the T+0 rolling settlement cycle in the equity segment on an optional basis. This new settlement cycle allows for same-day settlement of trades, in addition to the existing T+1 settlement cycle.

The Securities and Exchange Board of India (SEBI) has issued operational guidelines for the launch of this shorter tenure settlement cycle.

What is the T+0 Trading Settlement Cycle?

The T+0 trading settlement cycle, also known as same-day settlement, is a facility for clearing and settlement of funds and securities on the same day as the trade. Under this cycle, the settlement of trades will happen on the same day after the closure of the T+0 market. If investors sell a share, they will get the money credited to their account the same day, and the buyer will also get the shares in their demat account on the very day of the transaction.

Benefits of T+0 Trade Settlement

The T+0 trade cycle is expected to bring several benefits to investors and the securities market ecosystem:

Cost and time efficiency: The shortened settlement cycle will reduce the time and cost associated with settling trades.
Transparency in charges: Investors will have better visibility of the charges associated with their trades.
Stronger risk management: The T+0 cycle will strengthen risk management at clearing corporations and the overall securities market ecosystem.
Flexibility for investors: Investors will have faster pay-out of funds against securities for sellers and faster pay-out of securities against funds for buyers, allowing better control over their investments.
Enhanced market efficiency: The shorter settlement cycle will free up capital in the securities market, enhancing overall market efficiency.

Securities Available for Trading in T+0 Settlement Cycle

The stock exchanges have announced a set of 25 scrips which are allowed for trading on the T+0 settlement cycle. These include Ambuja Cements Ltd, Ashok Leyland Ltd, Bajaj Auto Ltd, Bank of Baroda, Bharat Petroleum Corporation Ltd, Birlasoft Ltd, Cipla Ltd, Coforge Ltd, Divi’S Laboratories, Hindalco Industries, The Indian Hotels Company Ltd, JSW Steel Ltd, LIC Housing Finance, LTIMindtree Ltd, Samvardhana Motherson International Ltd, MRF Ltd, Nestle India, NMDC Ltd, Oil & Natural Gas Corporation Ltd, Petronet LNG Ltd, State Bank of India, Tata Communications Ltd, Trent Ltd, Union Bank of India, and Vedanta Ltd.

Eligibility for Participation in T+0 Settlement Cycle

All investors are eligible to participate in the T+0 trade settlement cycle if they can meet the timelines, process, and risk requirements as prescribed by the Market Infrastructure Institutions (MIIs).

Trade Timings and Price Band

For the optional T+0 settlement cycle, there will be one continuous trading session from 09:15 AM to 1:30 PM. The settlement of funds and securities will be completed on the same day by 4:30 PM. The price band in the T+0 segment will operate with a price band of +100 basis points from the price in the regular T+1 market. This band will be recalibrated after every 50-basis points movement in the underlying T+1 market.

Future Plans

SEBI has also proposed to introduce optional instant settlement at a later stage, further reducing the settlement cycle and enhancing market efficiency.

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