SEBI to Offer T+1 Settlement Cycle for Stocks

27 January 2023
2 min read

As per the recent notification of SEBI, all the F&O stocks and remaining stocks in T+2 settlement will move to the T+1 settlement cycle with effect from 27th January 2023.

To check out the list of the stocks that are going to be transferred to a T+1 settlement cycle this month (27th January), click here

This will not impact intraday traders.

All stocks will now be moving to a T+1 cycle in phases. This shift takes place each month. 

As part of this process, a stock that is bought one day before the transition takes place will be blocked from selling the next day.

For example, as per SEBI, the final set of stocks is moving to a T+1 settlement cycle on 27th January. If you buy that stock on 25th January 2023 (Wednesday). You won’t be allowed to sell the stock the next working day (Friday). It will be unblocked to be sold on 30th January (the next working day - Monday), post which you can sell the stock.

Read on to find out more about what is t+1 settlement and how this will impact you.

What is Meant by ‘Settlement Cycle’?

Trading in the stock market is a function of buying and selling equities and derivative instruments. A transaction is said to be successful when each buys/sells order is executed and matched with a sell/buy order.  It is finally settled when the stocks are credited to your Demat account after you buy that stock. In the case of a sell transaction, the transaction is settled once the stock is debited from your Demat account.

Until now, it used to take 2 days for the stock to be credited to your Demat account after you bought the stock. Similarly, in the case of sell transactions, it took 2 days for the stock to actually leave your Demat account.

What is Changing for You?

On January 27, T+1 settlement is set to launch on the NSE and BSE. This will result in market having more liquidity as the settlement cycle will be shortened to T+1.

The SEBI T+1 settlement option for security shall be applicable to all types of transactions in the stock exchanges. For instance, if security is placed under T+1 settlement on a stock exchange, the regular market deals, as well as block deals, will follow the T+1 settlement cycle.

How Does it Impact You?

A shorter settlement cycle means quicker completion of trades. In a T+1 settlement cycle, the user can withdraw money a day earlier.

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