Share Market News: If you invest in the stock market, then this news is of great use to you. Actually, SEBI, the regulator of the stock market, has introduced a new system of T + 1 i.e. trade and next day for settlement of buying and selling of shares. However, it is optional and traders can opt for it if they want. If you understand in simple language, after selling the shares after the new rule, investors will get money only after a day of the business day. This shorter settlement cycle will be more convenient for investors. Experts say that the new rule will increase the supply of money in the stock market. SEBI has issued a circular stating that this decision has been taken after talks with the stock exchange, clearing corporation, and depositors.
The new rule will be effective from January 1, 2022
It needs to be noted here that once the stock exchange has opted for T+1 settlement cycle for any stock, then it will have to be continued for at least 6 months. On the other hand, if the stock exchange opts for T+2 settlement cycle in the middle, then it will be necessary to give notice 1 month in advance. SEBI’s new rule will be effective from January 1, 2022. Experts say that the purpose of the new system created by SEBI is to promote buying and selling in the stock market. Let us inform you that at present, T + 2 settlement cycle is applicable in the domestic stock market from April 2003. This means that when an investor sells a share, the share is blocked and after two days of the business day, the amount of that transaction is credited to the account. Before April 2003, T+3 settlement cycle was in force in the country. SEBI says that no difference will be made between T+1 and T+2. Also, the new rule will be effective on all types of transactions on the stock exchange.
According to the new circular of SEBI, the market regulator has provided the option of T+1 or T+2 on the time taken for settlement to complete the process of buying or selling of shares. With this move of SEBI, investors will be encouraged to invest in the stock market. However, SEBI’s new settlement plan is for shares and it has been kept optional for now. Let us tell you that in early August 2021, SEBI had constituted a panel of experts to report on the difficulties of the process of implementing T+1 cycle instead of T+2. Let us tell you that in 2003, the time taken to complete the deal was reduced from T+3 to T+2.
It is worth noting that The Association of National Exchange Members of India (ANMI) had sent a letter to SEBI expressing concern regarding the T+1 settlement system. ANMI said that the new system should not be implemented without addressing the operational and technical challenges. Let us tell you that there were constant requests to reduce the settlement cycle with SEBI. At the same time, keeping these requests in mind, SEBI has introduced a new rule for investors. SEBI has said in the circular that after discussions with the stock exchange, clearing corporation and depositors, a decision has been taken regarding the new rule.