Mint Explainer: What is T+0 settlement and how will it benefit investors?
Mint explains what all of this means for investors and the wider market. T+0 settlement simply means trades are settled on the day they are executed. That is, investors receive their securities or funds within hours rather than having to wait a day, as with the current T+1 cycle.
The T+0 settlement cycle will initially apply to a group of 25 stocks and a limited number of brokers. The plan is to implement it gradually, as with the T+1 cycle, which was fully implemented in January 2023. The 25 stocks are Ambuja Cements, Ashok Leyland, Bajaj Auto, Bank of Baroda, BPCL, Birlasoft, Cipla, Coforge, Divi’s Laboratories, Hindalco Industries, Indian Hotels Company Ltd, JSW Steel, LIC Housing Finance, LTIMindtree, Samvardhana Motherson International, MRF, Nestle India, NMDC, ONGC, Petronet LNG, SBI, Tata Communications, Trent, Union Bank of India, and Vedanta.
For now there will be a single, continuous session for T+0 settlement, from 9:15 am to 1.30 pm, with client code modifications allowed until 1:45 pm. T+0 settlement will not apply to certain trading sessions, including pre-open, special pre-open, block window, auction, periodic call auction, and post-close. The specifications for T+0 securities, such as ISIN, symbol, tick size and market lot will be the same as those of the corresponding T+1 securities.
The closing price of the T+1 settled security will be the closing price of the corresponding T+0 settled security, meaning there will be no separate closing price for T+0 securities. T+0 settlement is expected to significantly enhance the efficiency of the stock market in the long term. Selling stocks and being able to use the funds immediately to buy others will boost liquidity and trading volumes.
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