T+1 settlement cycle for all Future & Options stocks from January 2023: Stock exchanges

To bring in operational efficiency, stock exchanges on Wednesday said that all stocks, on which derivatives contracts are available, will be transitioned to the T+1 (trade plus one day) settlement cycle from January 2023.

Earlier, future and options (F&O) stocks were to be transitioned to the T+1 settlement in two batches -- December 2022 and January 2023, according to a joint statement issued by market infrastructure institutions (MIIs) -- stock exchanges, clearing corporations and depositories.

T+1 means that market trade-related settlements will need to be cleared within one day of the actual transactions taking place.

In September last year, the Securities and Exchange Board of India (Sebi) permitted stock exchanges to introduce a T+1 settlement cycle from January 1, 2022, on any of the securities available in the equity segment.

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After this, all MIIs issued a joint press release concerning the roadmap for the implementation of the T+1 settlement cycle. Accordingly, all listed stocks, across stock exchanges -- BSE, NSE and MSE -- were ranked in descending order based on daily market capitalisation averaged for October 2021.

In the first phase, the bottom 100 stocks were made available for the introduction of T+1 settlement, from the trade date of February 25, this year based on the ranking arrived. Thereafter, from March onwards, on the last Friday (trade day) of every month, the next bottom 500 stocks from the list of stocks ranked, are being made available for introduction to T+1 settlement every month till January 2023.

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"To bring in operational efficiency and ease for market participants, it has been now decided that all stocks on which derivatives contracts are available will be transitioned to T+1 settlement in a single batch i.E. In January 2023 instead of two separate batches," the joint statement noted.

Accordingly, the stock exchanges will revise the original schedule for the transition of stocks to the T+1 settlement.