MUMBAI – In line with the directions by the Securities and Exchange Board of India (Sebi), stock exchanges will introduce the same-day or T+0 trade settlement for a limited set of securities from March 28.

The beta version of T+0 settlement will be introduced for a limited set of 25 scrips and with a limited number of brokers. Exchanges will be sharing the list of scrips and the brokers at a later date.

But let’s try and understand the concept and how is it different from the current T+1 trade cycle.

What is Trade Settlement?

Trade settlement is the process of transferring securities and funds between buyers and sellers after a trade is executed. The shorter the settlement cycle, the faster investors can access the securities and funds.

How are trades currently being settled?

Currently, the Indian stock market operates on a T+1 settlement cycle for all scrips. For example, if an investor buys shares on Monday, he/she will receive them in their demat accounts on Tuesday. Similarly, if the shares are sold on Monday, they will receive the money in their bank accounts on Tuesday.However, stock exchanges will introduce the T+0 settlement cycle, which will work along with T+1. Under T+0, trades will be settled on the same day.

Where can you get information about the settlement calendar for T+0 security?

NSE Clearing will incorporate the settlement calendar of T+0 in the monthly settlement calendar circular. The settlement calendar for T+0 will be part of the STC report downloaded to members. The settlement calendar for T+0 will be available on respective depositories also.

What is the mechanism of pay-in/ early pay-in of securities in T+0 security?

Pay-in for T+0 sell obligations will be allowed only by way of early pay-in using, the block mechanism.

What is the cut-off for EPI/ Pay-in of securities? Is there a separate cut-off for EPI of securities for UPI clients?

The pay-in for T+0 has to be provided only in the from of early pay-in, using the block mechanism.

The cut-off for EPI of security at depositories shall be 1:45 pm on T-day. This includes EPI for UPI as well as non-UPI clients.

Will the obligation for T+0 netted with the obligation of F&O physical expiry on T-Day?

Obligation for T+0 will not be considered for netting with F&O physical obligation on expiry days.

Will the obligation for T+0 settlement be netted with the obligation for T+1?

The obligation for T+0 settlement will not be netted with that for T+1 settlement.

Where can members get margin rates of T+0 security?

The margin applicable for securities in the T+1 market will be applicable for the T+0 market as well.

Is auto-do and direct payout to client facility applicable for T+0?

Auto do facility will not be applicable for T+0 as all the pay-in has to be done in the form of EPI. Members shall have the facility to provide a request for client direct pay-out for T+0 settlement.

Is auction applicable for shortages in the T+0 settlement? What is the action on shortages?

The auction will not be conducted in case of security shortages. Security shortages shall be directly closed out at 10% above the highest price of the day across all exchanges for the T+0 market.

Action on shortages will continue as per the existing rules for the cash market.

Is the preferred depository facility available for T+0 settlement?

The preferred depository facility is available for T+0 settlement, similar to settlement in T+1 cycle.

Will the margin rates for securities in T+0 differ from that applicable in T+1?
No, it will be the same.

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