Good news for investors in Stock Market

In stock market, the amount will come in the bank account the next day after selling the shares.

If you also invest in the stock market then there is good news for you. After selling the first shares, money used to come in your bank account in the next 2 business days. Stock market regulator Securities and Exchange Board of India or SEBI has allowed stock exchanges to adopt T+1 settlement cycle with short-term settlement. The system of T plus one settlement is going to be implemented from January 1, 2022. Stock traders and investors are expected to benefit greatly from the T+One settlement system.

What is settlement cycle?

If you trade in the stock market then you must know about the settlement cycle. The arrangement of money transactions in the stock market is different from that of a bank or other financial institution. Money transfer or transaction from bank or other payment system reaches your account immediately, but this does not happen in the stock market. Presently the stock market works on T+2 settlement cycle.

T + 2 settlement

If you have bought a share today, then the share reaches your Demat account on the third day of the trading day or two days after the trading day. Similarly, if you have sold a share, then its money reaches your bank account after 2 days of trading. This is called the settlement cycle.

Benefit from T + 1 settlement

Investors can get a lot of relief due to the implementation of t plus one settlement cycle in the stock market. The advantage of this will be that if you buy the shares today, then after 1 day the shares will reach your demat account. Similarly, if you sell a share today, you will get money in your account by tomorrow only.

Impact of the settlement system

With the introduction of T+1 settlement cycle in the trading of the stock market, the volume of share trading may increase. With T+One settlement, people will get quick money in case they sell their shares, which will enable them to invest in new shares quickly. This will ensure faster settlement and increase the efficiency of the exchange.

Not mandatory T + 1 settlement

The stock market regulator SEBI has not yet made the T+One settlement system mandatory. It is up to the stock exchange whether they adopt the T1 system or go with the old system. The exchange will give this information to its investors one month in advance before adopting any settlement arrangement. After introducing the new system of settlement cycle, the stock exchange will have to continue it for at least 6 months.

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