Mint Explainer: T+1, a milestone for the Indian stock market
- The shift to quicker settlements is the culmination of a long journey that began in 2001
Beginning 27 January, all stocks in Indian markets will shift from T+2 to a shorter T+1 settlement cycle, where trades are settled just a day after they are done. Structurally, it will make India one of the most progressive and transparent equity markets in the world. It’s the latest in India's equity market reforms that began in 2001 with the ban on badla – the carryforward mechanism for trades on the BSE – after the Ketan Parekh scam. Badla made way for equity derivatives, with index options now the most popular futures and options (F&O) product on the NSE. It signals the maturing of investors and traders in India who understand the nuances of the stock market much better, preferring the less volatile index options over the riskier stock futures and stock options.
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