SEBI's Latest Move: T+0 Settlement Cycle Explained and Its Benefits for short-term traders

The Indian stock exchange and sebi has implemented T+0 settlement cycle starting today, March 28, 2024. This means that transactions will be settled on the same day.

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T+0 settlement cycle overview

India is the second country after another country to implement same-day transaction settlement in the stock exchange, known as T+0 settlement by SEBI. This means that after selling shares, you will receive the money on the same day without having to wait until the next day. Before T+0, there was a T+1 settlement cycle where you had to wait until the next day to receive the money.

Although T+0 settlement has not been fully launched yet, it is currently in the beta phase. This means that it will be implemented only on a few stocks and with selected brokers. It has not been rolled out to all stocks yet. This implies that it is a trial program designed to identify any potential issues, find solutions, and ensure a smooth transition before full implementation. Once the trial is successful without encountering any major problems, it will be launched in its entirety.

Differance between T+1 & T+0

In the T+1 settlement cycle, when you sell shares of any value, they will not reflect in your account on the same day. It means that 80% of the sale proceeds will be given to you on the day of the sale. However, you will have to wait for the next day to receive the remaining 20% of the proceeds.

If we talk about the newly launched T+0 settlement, after selling shares, the entire value will be credited to your account immediately. You won’t have to wait for the next day. With the deposited amount, you can immediately utilize it elsewhere, which will be quite helpful, especially for short-term traders.

T+0 Trade Settlement Cycle

The timing of the T+0 settlement cycle will be from 9:15 am to 1:30 pm. This means that if you sell shares by 1:30 pm, their settlement will be completed by 4:30 pm, which is referred to as the first phase. In the second phase, an optional immediate trade-by-trade settlement facility will be provided for all trades conducted until 3:30 pm.

All stocks Under T+0

Here is the list of 25 stocks that are included in the T+0 settlement. Although the basis for selecting these stocks is not specified.

1. Ashok Leyland Ltd.
2. Bajaj Auto Ltd.
3. Bank of Baroda
4. Bharat Petroleum Corporation Ltd.
5. Birlasoft Ltd.
6. Cipla Ltd.
7. Coforge Ltd.
8. Divis Laboratories Ltd.
9. Hindalco Industries Ltd.
10. Indian Hotels Co. Ltd.
11. JSW Steel Ltd.
12. LIC Housing Finance Ltd.
13. LTI Mindtree Ltd.
14. MRF Ltd.
15. Nestle India Ltd.
16. NMDC Ltd.
17. Oil and Natural Gas Corporation
18. Petronet LNG Ltd.
19. Samvardhana Motherson International Ltd.
20. State Bank of India
21. Tata Communications Ltd.
22. Trent Ltd.
23. Union Bank of India
24. Vedanta Ltd.
25. Ambuja Cements Ltd.

Some Key benifits

Increased Trading Opportunities : T+0 settlement provides investors with the convenience of executing trades immediately, enabling them to benefit from short-term trading opportunities and market fluctuations.
Reduced Settlement Risk : The same day settlement of funds reduces settlement risk and enhances confidence, ensuring smoother trading experiences with T+0 settlement.
Liquidity : T+0 settlement allows for effective management of liquidity by providing investors with immediate access to funds and securities following trade execution.