TNPSC Thervupettagam

T+1 settlement cycle

January 30 , 2023 424 days 445 0
  • India transitioned to a market-wide Transaction+1 (T+1) settlement system for equities from the previous T+2 cycle.
  • The new system was first introduced by market regulator, the Securities and Exchange Board of India (Sebi), in 2021
  • It has been implemented phase wise starting from smallest companies by market capitalisation to larger ones.
  • It has become the second largest market after China to have made the transition ahead of the U.S., Europe and Japan which adhere to the T+2 settlement cycle.
  • A trade involves three important functions, execution of trade, clearing and settlement, carried out by separate entities. 
  • It is represented using ‘T’, that is, trade executed on a particular day.
  • Since clearing used to take place the next day followed by another day for settlement, the previous mechanism was defined as ‘T+2’.
  • From now onwards, the settlement will be done the next day itself, thus, T+1.

Leave a Reply

Your Comment is awaiting moderation.

Your email address will not be published. Required fields are marked *

Categories