The SEBI today (September 7, 2021) gave a go-ahead to the T+1 rolling system of trade for stocks on an optional basis. So, as a result the exchanges will have a choice to provide the facility. The option has been considered as various stakeholders in the system have been requesting to shorten the time in relation to settlement of stocks. The new rule will come into force on January 1, 2022.
"Based on discussions with Market Infrastructure Institutions (Stock Exchanges, Clearing Corporations and Depositories), it has been decided to provide flexibility to Stock Exchanges to offer either T+1 or T+2 settlement cycle," SEBI in its circular said.
Furthermore, the facility on any of the scrip can be extended to all of the stakeholders, including the public, after telling them in advance about the change in the settlement cycle.
According to the latest circular, a stock exchange can choose to offer T+1 settlement cycle on any of the scrips to all stakeholders -- including the public at large -- after giving advance notice of at least one month regarding the change in the settlement cycle.
And if the exchange opts for a T+1 settlement system for a scrip then it will have to adhere to it for a minimum of 6 months and then in case if it seeks to transition to the previous settlement cycle, the same can be executed by giving prior 1-month notice to the market. However, SEBI made it clear that there will be no netting between T+1 and T+2 settlements. The settlement option for security will be applicable to all types of transactions in the security on that stock exchange, the circular added.
In the current regime, T+2 settlement system is followed meaning trades are settled 2 working days after the trading in a security.