Table of Contents
- How was the earlier settlement system in the Indian Stock Market?
- What is the settlement cycle in the Stock Market?
- What do other countries follow?
- Which shares are available to the T+0 settlement system?
- What are the benefits of a faster settlement cycle?
Bharat taking bold and crucial steps to create Bharat’s new growth stories. On 28 March 2024, Bharat introduced the fastest settlement cycle T+0. It will bring cost, time efficiency, and transparency to the stock market ecosystem. Bharat is taking bold and important steps in the financial world. Last year In June 2023, Nifty 50 index derivatives trading shifted to NSE IFSC ( International Financial Service Center). India’s Nifty 50 index derivatives were traded on the Singapore Exchange. It gives more control over the financial market. Now one more development to strengthen the Bharat’s economy.
How was the earlier settlement system in the Indian Stock Market?
Indian stock market progressively changed settlement cycle over the years. Settling transactions always benefits buyers and sellers as they can react to the market effectively.
Before 2002, the Indian stock market followed a T+5-day settlement cycle.
In 2002, the system changed and started the T+3 settlement cycle. It reduced settlement time to 3 days.
In 2003 another settlement cycle was introduced and the Indian stock market started working with the T+2 cycle.
In 2021 market regulators introduced the T+1 settlement cycle as a beta version.
After 20 years in 2023, SEBI implemented the T+1 settlement cycle across the Indian Stock Market.
In 2024, SEBI worked on the T+0 system and introduced a beta version of the instant settlement cycle.
What is the settlement cycle in the Stock Market?
If you are new in the stock market this question is for you. The settlement cycle is a timeline to complete the transaction. Let’s understand with an example.
Mr Ram Ji bought shares of the company Hanuman Securities Ltd on Monday. According to the different settlement cycles:
T+2 settlement cycle: Shares will be deposited in Ram ji’s brokerage account after 2 business days i.e. Wednesday from the day of the transaction “T”. On the other side on Wednesday, the broker released money to the seller.
T+1 settlement cycle: In this settlement cycle Ram ji will receive shares in the brokerage account on Tuesday and money will be deposited in the seller account.
T+0 Settlement Cycle: The new settlement system will settle the transaction on the same day. On the same day, buyers will receive their stocks and money will be deposited in a seller’s account.
What do other countries follow?
In 2023 Bharat became the first country to shift the T+1 settlement cycle. Most of the exchanges followed the T+2 cycle. The USA already scheduled May 28 to shift to the T+1 cycle. China too is in the process of shifting to a faster settlement cycle.
| Country Name | Exchange Name | Country Name |
| Bharat ( INDIA ) | National Stock Exchange (NSE) | T+1 |
| China | Shanghai Stock Exchange (SSE) | T+2 |
| US | New York Stock Exchange (NYSE) | T+2 |
| Japan | Tokyo Stock Exchange (TSE) | T+2 |
| UK | London Stock Exchange (LSE) | T+2 |
Which shares are available to the T+0 settlement system?
It is a pilot project which will co-exist with the T+1 settlement cycle. In other words, T+0 will be available for some shares and applicable only from 9:15 AM to 1:30 PM tadinging window. The rest of the shares will work with the existing settlement cycle i.e. T+1 cycle.
According to a circular issued by Indian Exchange, the following list of shares is available.
- Ambuja Cements.
- Ashok Leyland.
- Bajaj Auto
- Bank of Baroda
- Bharat Petroleum Corporation
- Birlasoft
- Cipla
- Coforge
- Divis Laboratories
- Hindalco Industries
- Indian Hotels Company
- JSW Steel
- LIC Housing Finance
- LTIMindtree
- MRF
- Nestle India
- NMDC
- Oil And Natural Gas Corporation
- Petronet LNG
- Samvardhana Motherson International
- State Bank Of India
- Tata Communications
- Trent
- Union Bank Of India
- Vedanta.
What are the benefits of a faster settlement cycle?
Improve Flexibility: A faster settlement process helps to receive shares or funds most quickly. So investors or traders can react to market moments quickly or in a more useful way. You can sell shares and use funds to buy better-quality stocks.
Less Risk: When the system follows a longer settlement cycle, it increases the chance of defaulting. Buyer and seller may step out from the transaction before it gets settled.
Increased Liquidity: A shorter settlement cycle will increase liquidity in the market, It leads to more trading activity and creates short-term opportunities for investors and traders.
Bharat taking major steps to make investment and trading easy and more efficient. Gift Nifty, Start-Up India, Made In India and now Fastest Settlement cycle, like decisions clearly show that Bharat is growing rapidly to become a financial powerhouse. World investing in Bharat, do not let this financial revolution pass you by. Start learning about the market, explore investment options and take control of your financial future. Visit our Finance and write your own financial and wealth stories.
