Introduction of T+1 rolling settlement on an optional basis

Securities and Exchange Board of India

The Securities and Exchange Board of India shortened the settlement cycle from T+3 rolling settlement to T+2 w.e.f. April 1, 2003, via circular no. SMD/POLICY/Cir – /03 dated February 6, 2003.

SEBI has received requests from a variety of stakeholders to cut the settlement cycle even more. Following negotiations with Market Infrastructure Institutions (Stock Exchanges, Clearing Corporations, and Depositories), it was decided to give Stock Exchanges the option of using either the T+1 or T+2 settlement cycle.

As a result, a Stock Exchange may choose to offer T+1 settlement cycle on any of the scrips after providing at least one month’s notice to all stakeholders, including the general public, and distributing the information on its website.

After choosing T+1 agreement cycle for a scrip, the Stock Exchange shall must mandatorily retain with the identical for a minimal length of 6 months. Thereafter, in case, the Stock Exchange intends to exchange again to T+2 agreement cycle, it shall accomplish that through giving 1-month develop observe to the market.

Any next switch (from T+1 to T+2 or vice versa) will be subjected to minimal period and notice duration as cited in Para 4 above.

T+1 and T+2 settlements shall not be netted.

Security settlement options shall be applicable to all transactions on that Stock Exchange involving that security.

For example, if a security is settled over T+1 process on a stock exchange, all regular market and block deals on that exchange will follow T+1 settlement cycle.

As of January 1, 2022, these provisions will take effect.

Specifically, the Stock Exchanges, Clearing Corporations, and Depositories are directed to implement the necessary procedures and systems to enable a smooth transition to T+1 settlement cycle on an optional basis, including any necessary amendments to their by-laws, rules and regulation.

The Securities and Exchange Board of India has issued this circular in exercise of the powers granted under Section 11(1) of the Securities and Exchange Board of India Act 1992, and Section 10 of the Securities Contracts (Regulation) Act, 1956 for the purpose of protecting investors’ interests in securities and maintaining market order.

You can access this circular on SEBI‘s website at www.sebi.gov.in under “Legal Framework → Circulars”.