Home / Markets / What happens to stocks bought today as they move into T+1 settlement cycle

From 25th February 2022 onwards exchanges have been migrating stocks to T+1 settlement in a phased manner starting with stocks with the lowest market cap. From 27th January 2023 onwards, the final batch of securities including stocks, ETFs, debt instruments, REITs, and InvITs will be moving to the T+1 settlement cycle.

Due to a change in the settlement cycle, any of these stocks bought on Wednesday, 25th January 2023, will not be available for selling on Friday, 27th January 2023 due to the risk of short delivery and subsequent auction penalty which can be up to 20%. They will be settled by the exchange on Monday as per the old T+2 settlement cycle and will be available for selling on Monday, said Bengaluru-based brokerage firm Zerodha in its blog.

The stocks bought on Friday, January 27, 2023 will be settled as per their new settlement cycle, T+1, and will be available for selling on Monday. The credit received from selling these T1 settled stocks will be available for withdrawal from the next day itself, that is on T+1, it added. 

All large-cap and blue-chip companies will switch to the T+1 system on January 27. T+1 means that market trade-related settlements will need to be cleared within one day of the actual transactions taking place.

“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. Accordingly, Exchanges will revise the original schedule for transition of stocks to T+1 settlement and issue the circular informing the list of stocks to be transitioned in December 2022 and January 2023," as per SEBI circular.

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