T+1 Settlement - SEBI issues circular; what this SCHEME will do? Know RULES, BENEFITS! Anil Singhvi lauds decision – Spells out CAVEATS too
Zee Business Managing Editor Anil Singhvi called this move unprecedented and something which was not there even in Global Markets. The new system of settlement will be beneficial for stock brokers, invetors, traders and solve liquidity issues
Securities and Exchange Board of India (SEBI) has issued a circular on T+1 Settlement. Zee Business news, which has previously reported on this gets yet another stamp of approval. What is this development and how it is going to impact traders or investors? Brajesh Kumar has this detailed report.
Kumar said that after the issuance of this circular, the exchanges will now have an option to settle trades in T+1 system. This means that if a buyer or seller of a share does a trade on the exchanges, the settlement of the trade will be done on the next day itself. This will depend on whether the exchange is giving that option with relation to a particular share on its sale and purchase, he said.
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The exchanges have the option to implement it from 1 January 2022.
What does T+1 Settlement mean for a Buyer or Seller?
Under the current scheme, the trade i.e. sale or purchase of a share is executed in T+2 days. The new system will expedite the process for the seller or a buyer. For a buyer, once the trade is done, the shares will start reflecting in his account on the next day. As for the seller, the money will be credited to his account on the next day of the trade.
Rules of T+1 Settlement
- SEBI has said that if the exchanges decide to bring a particular share under the T+1 settlement, they will be required to issue a notice it one month prior to the implementation date. The exchanges will be required to publicise it via different mediums. This information must also be present on their websites.
- Once a share is brought under the T+1 settlement scheme, it must be continued for 6 months in the least.
- If the exchanges want to reverse it to the T+2 system, a notice will be required to be given one month prior to implementation.
These rules are not mandatory for the exchanges to implement. The onus will rest on the exchanges whether to follow the scheme or not. The exchanges will have the freedom to choose which share they would want to put in T+1 Settlement and which shares in T+2 Settlement.
Zee Business had broken this news on 30 August.
Zee Business Managing Editor Anil Singhvi called this move unprecedented and something which was not there even in Global Markets. The new system of settlement will be beneficial.
The Market Guru said that the working capital requirement for stockbrokers will reduce and the margins available to them will be release a day before.
SEBI has been tightening the rules around the margins.
This will also help traders and investors to manage and time the bets as the money on sale of shares will be credited one day before.
This is an important development.
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क्या है T+1 सर्कुलर ?
T+1 से क्या होगा फायदा ?
कब से होगा लागू ?#ZeeBusiness ने 30 अगस्त को दिखाई थी खबर - जानिए अनिल सिंघवी और ब्रजेश कुमार मिश्र से निवेशकों को किन बातों का रखना होगा ध्यान' @AnilSinghvi_ @BrajeshKMZee @SEBI_India pic.twitter.com/AZNu5sBspW— Zee Business (@ZeeBusiness) September 7, 2021
T+1 Settlement System Caveats
- Market Guru said that it will be interesting to see how exchanges implement this scheme
- The financial system will also have to gear-up for the changes as online and real time transfers will have to be robust.
- The entire ecosystem including exchanges, depositories, stock brokers will have to make changes accordingly.
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