Livemint reported that BSE, formerly known as Bombay Stock Exchange, released a list of 25 stocks eligible for T+0 Settlement starting today, 28th March.
State Bank of India (SBI), Bajaj Auto, Cipla, Bharat Petroleum and Ambuja Cements are among the many stocks available for the optional same-day stock settlement.
What does a T+O Settlement evoke?
The T+O Settlement incudes two factors, T being the day of the trade and O being the number of days taken for settlement. This implies that the transfer of securities and funds will happen on the same day of the trade. This sort of settlement mitigates transactional risks and improves market efficiency by offering instant liquidity to investors.
India follows a T+1 Settlement policy which entails that the trade is finalized the day after they occur. This factor reduces overall capital requirement and increases capital flow as the transactions and funds are settled within 24 hours of selling the shares. The T+1 Settlement is not favored by the foreign investors mainly due to time zones. As of now both the forms of settlement are in use, with T+O Settlement being optional.
In terms of eligibility, the regulatory body has outlined that all investors will have the opportunity to participate in the T+0 settlement cycle, provided they can adhere to the specified timelines, procedures, and risk standards as dictated by market infrastructure institutions.
Trading hours are set between 9:15 am and 1:30 pm. Prices within the T+0 segment will be subject to a price band of +100 basis points relative to the regular T+1 market. This band will be adjusted following every 50 basis points movement in the underlying T+1 market. Additionally, surveillance measures applicable to the T+1 settlement cycle will extend to securities within the T+0 settlement cycle.
What is the impact on current stock prices? 
Sellers under the present T+1 system may only get 80% of their cash on the day of sale; the remaining 20% must be waited for the following day. Nonetheless, sellers will have instant access to 100% of their cash on the day of transaction due to the new T+0 settlement system.
The opening price for Bajaj Auto was valued at 9,162.50 and is currently being valued at 9,220.00. The implication of the T+0 Settlement will boost the stock value as seen with Bajaj Auto and could potentially lead to increased trading opportunities and reduced settlement risks for investors.
The regulator said that T+0 prices will not be considered in index calculation and settlement price computation. There will be no separate close price for securities based on trading in the T+0 segment.
List of 25 scrips under this settlement
The 25 scrips available for the T+O Settlement include Ambuja Cements, Ashok Leyland, Bajaj Auto, Bank of Baroda, Bharat Petroleum Corporation Ltd (BPCL), Birlasoft, Cipla, Coforge, Divi’s Laboratories, Hindalco Industries, Indian Hotels Company Ltd, JSW Steel, LIC Housing Finance, LTIMindtree, Samvardhana Motherson International, MRF, Nestle India, NMDC, Oil and Natural Gas Corporation (ONGC), Petronet LNG, SBI, Tata Communicationa, Trent, Union Bank of India and Vedanta.
The introduction of T+0 settlement in India marks a significant step towards enhancing market efficiency and reducing transactional risks for investors. With the option for same-day stock settlement now available, investors can benefit from immediate access to funds, thereby potentially increasing trading opportunities. This move could also lead to a boost in stock values, as observed with Bajaj Auto, and may encourage greater participation in the market.
Proactive approach
The adoption of T+0 settlement by the Bombay Stock Exchange reflects a proactive approach towards modernizing India’s financial infrastructure and aligning with global market practices. While the option for same-day settlement provides convenience and liquidity to investors, it also underscores the importance of stringent risk management and regulatory oversight. As market participants adapt to this new settlement system, it’s essential to monitor its impact on trading dynamics and overall market stability. Nonetheless, this development presents an exciting opportunity for investors and stakeholders in India’s evolving financial landscape.
