What are SEBI T+1 cycle new rules?

The Securities and Exchange Board of India (SEBI) introduced the T+1 (Trade plus day 1) cycle for stocks on an optional basis. The said rule shall be effective from January 1, 2022. This change has been considered after the market regulator has received requests from various stakeholders to further shorten the settlement cycle. So, as per the circular, a stock exchange can choose to offer a T+1 settlement cycle on any of the scrips to all stakeholders. However, it shall require to give advance notice of at least one month for any change in the settlement cycle.

If a stock exchange opts for a T+1 settlement cycle for a scrip, it will have to mandatorily continue with the same for a minimum period of six months. In case the stock exchange wishes to switch back to the old (T+2) cycle, it shall give one month's notice to the market. However, there will not be any netting between the T+1 and T+2 settlements. Also, the settlement option will apply to all types of transactions on particular stock exchanges.