Now, sell your shares and use 100% of the proceeds to transact more the same day

Investors can now sell their shares and access 100% of the sale proceeds in their trading account, allowing them to make fresh transactions. The change came into effect today following the issuance of a recent NSE circular.

Previously, investors could access 80% of the sale proceeds on the day of the sale, and the remaining 20% would be settled on the day following the trade. This rule was rolled out in four phases and was fully effective by September 2021.

However, the new change will allow investors to access the entire sale proceeds for further trades on the same day the trade is executed. The new system came into effect on October 15, 2024.

The rule will apply to both stocks and futures & options (F&O) trades.

To be sure, the new rule only allows investors to access funds in order to make new trades – it does not mean investors get the amount credited to their bank accounts, which can take place only after completion of the settlement cycle, which is currently T+1 day for most stocks and an optional T+0 (or same-day settlement) for select stocks.

For example, under the previous rule, if an investor sold shares worth Rs 50,000, he/she would only receive Rs 40,000 on the day of the trade, with the balance of Rs 10,000 being accessible on the next trading day. With the new changes in place, an investor will be able to access the entire Rs 50,000 on the same day of the trade for further trades.

The new change will also allow traders to access intraday profits on the same day instead of being settled on the following trading day.

SEBI had issued a circular earlier that mandated the payout of securities directly to the client’s demat account to protect the client’s securities along with boosting operational efficiency and reducing risk. 

The change in the payout system is expected to benefit the market’s ecosystem by providing quicker access to funds. With increased liquidity, traders and investors will be able to utilise the funds to capitalise on market opportunities and plan for other trades. 

However, in the case of Buy Today, Sell Tomorrow (BTST) trades, credit from the sale of T+1 holdings cannot be used on the same day. This is because such credit can be used only after the Early Pay-In (EPI) process is completed. This process cannot be carried out till the shares are credited to the client’s demat account.

Despite the change in the settlement cycle, it is important to note that SEBI has not yet approved the mechanism for instantaneous settlement. Under the instantaneous settlement option, stocks and funds are instantly exchanged on the execution of a trade.

Disclaimer: This blog is solely for educational purposes.