On The Next Trading Day, Shares Will Be Transferred, And Market Volatility Will Rise.
Key Sentence:
- Market regulator SEBI will implement an alternative T + 1 (trade and next day) settlement arrangement from January 1 next year.
- Trading in the stock market now takes two days to complete. Let us know what will change with the implementation of the new system.
How is the T + 1 settlement cycle different?
When we buy shares of a company on BSE and NSE today, the shares will be transferred to your Demat account within the next two working days of trading. Only then can you sell those shares. The announce will be transferred to your Demat account on the next trading day from January 1. Until 2003 the T + 3 settlement cycle was in circulation. The T + 1 process is optional. However, from January 1, if a stock exchange wants to continue T + 2 settlement, it has to give one month notice.
What is the motive behind implementing the new settlement system?
The purpose of SEBI's decision to reduce the settlement cycle is to increase the turnover of shares in the market. This decision is in the interest of investors. The shorter the settlement cycle, the lower the operational risk.
What will be the benefits of T + 1 for different investors?
T + 1 will be more beneficial for investors than trading a large number of shares. It involves domestic and foreign institutional investors such as mutual funds. The facility will be available in case of cash occurring one day before the settlement.
Source from Divyabhashkar