Circular No. 6 dated February 06, 2003

Feb 26, 2003

E-Mail :

SMD/POLICY/Cir - /03
February 6, 2003

The Executive Director/ Managing Director
of all the Stock Exchanges

Dear Sir/Madam,

It has been decided to further shorten the settlement cycle from the existing T+3 rolling settlement to T+2 w.e.f. April 01, 2003.

We had vide our circular No. SMD/Policy/Cir-05/2002 dated March 26, 2002 intimated the activity schedule for the implementation of the rolling settlement on T+3 basis. In view of the shortening of the settlement cycle, the activity schedule has been revised and the following activity schedule shall be adhered to by the stock exchanges. The activity schedule has been finalised through a consultative process with various market participants viz. stock exchanges, broker associations, custodians, depositories, depository participants etc.

S. No. Day Time Description of activity
1 T   Trade Day
2 T+1 By 11.00 am  Custodial conformation of trades. Facility of an Exception window for late confirmations to be provided. 

(The time limit for late confirmation to be fixed in a manner that the download of the final obligation files to the brokers by 1.30 pm is not delayed.) 

By 1.30 pm Process and download obligation files to brokers/ custodians
3 T+2 By 11.00 am Pay-in of securities and funds.
By 1.30 pm Pay-out of securities and funds.

The stock exchanges shall also put in place the following systems for effecting settlement on T+2 basis.

  1. A facility of late confirmation of trades by the custodians shall be provided. However, the time limit for late confirmation shall be fixed in a manner that the download of the final obligation files to brokers is not delayed.
  2. The stock exchanges would levy an additional charge to discourage late confirmations by the custodians.
  3. The stock exchanges would provide a system for handling shortages of funds and securities in an expeditious manner to adhere to the time schedule for pay-out.
  4. The stock exchanges would also amend their byelaws to mandate the pay out of funds and securities to the clients by the broker within 24 hours of the payout.
  5. The stock exchanges shall design an alternative clearing and settlement system in respect of companies whose shares have not been dematerialised to align the clearing and settlement system for such stocks with the T + 2 rolling settlement.
  6. The stock exchanges shall not normally permit changes in the Client ID and would keep a strict vigil on cases of client code modification and would implement a monetary penalty structure that would escalate with the number of such incidences. Besides, the exchanges may take necessary action against members making repeated changes. However, genuine mistakes may be allowed to be rectified.
  7. Stock exchanges would encourage members to adopt automatic downloading of pay-in files for securities and funds. The members would also be encouraged to adopt direct transfer of securities/ funds to clients’ account on pay-out.

The stock exchanges are advised to bring to the notice of their members the following activity schedule to be adhered by the stock brokers in the T + 2 rolling settlement.

S.No. Day Time Description of activity
1 T   Trade Day
2 T+2 Until 10.30 am Accept Pay-in instructions from investors into pool account.
By 10.30 am  Submit final pay-in files to the depository and the clearing bank. 

While the above schedule of activities for the exchange and the brokers is necessary for the implementation of the T+2 rolling settlement, the stock exchanges may also provide the following facilities desirable for further smoothing clearing and settlement process, though these may not be pre-conditions for introduction of T + 2 rolling settlement.

  1. Facility of online confirmation of trades by custodians.
  2. System to capture the details of the client’s depository account and bank account.
  3. System for online transmitting the client wise pay-in obligation to depository so that the depository in turn could download the security pay-in instructions to depository participants in respect of the investor maintaining account with them.
  4. System wherein the pay-out files could be sent to the clearing banks with a request to online credit to the bank accounts of the clients.
  5. The stock exchanges would support development of front end software for brokers to map the Client ID through abbreviated keys to facilitate faster order entry for inserting the unique client code speedily.

The stock exchanges are advised to develop a roadmap for implementation of the above desirable facilities and submit the same to SEBI.

Yours faithfully,


Copy to

Managing Director, NSDL
Managing Director, CDSL