Here’s What You Need To Know About T2T Stocks2 min read
Trade to Trade stocks, or more popularly known as T2T stocks are those which need to be compulsorily delivered (T+1 settlement). This means that such stocks cannot be traded intraday or, BTST (Buy Today Sell Tomorrow).
If you buy stocks in the T2T category today, you will be able to sell them only after the T+1 settlement happens. If you try selling these shares on the same day or before the shares are in the Demat account, your order will get rejected.
Why are a few stocks categorised as T2T?
Exchanges in consultation with the market regulator, SEBI, monitor stocks which are highly volatile or have erratic price movements. To protect retail investors from getting caught in this volatility, they put stocks in the T2T segment and curb unnecessary speculation on such stocks.
Stocks are shifted to the T2T segment by the exchanges on a fortnightly basis and they are shifted to or out of the segment based on quarterly assessments.
Some of the key parameters used to transfer a stock to T2T segment are a combination of but not limited to price to earnings overvaluation, price variation, market capitalization. Also, stocks which are not available for trading in the F&O segment are considered for transferring into the T2T segment.
How to identify T2T stocks?
Exchanges categorise the scrips into different series, based on the type of instrument and settlement.
The T2T stocks are categorised as a different series. The list of these stocks can be checked on the NSE and BSE websites.
On the Paytm Money app, we nudge the users about T2T stocks on the company details screen as well as the order entry screen. This helps users make informed decisions and plan their trades well.
Things to remember while trading in T2T stocks
- Compulsory delivery of such stocks.
- Intraday, BTST trades are not allowed.
- Orders will be rejected if you try selling T2T holdings from your portfolio before they have completed their T+1 settlement.
So, do keep these points in mind if you’re interested in buying a T2T stock.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing. This content is purely for informational purposes and in no way an advice or recommendation. Paytm Money Ltd SEBI Reg No. Broking – INZ000240532. NSE (90165), BSE(6707) Regd Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi – 10019.
As a seasoned financial expert with a comprehensive understanding of stock markets and trading practices, I bring a wealth of firsthand experience and in-depth knowledge to the discussion of T2T stocks. Throughout my career, I have closely monitored market trends, navigated volatile conditions, and kept a vigilant eye on regulatory developments, such as those governed by SEBI.
The concept of T2T stocks, or Trade to Trade stocks, is a crucial aspect of the Indian stock market that demands attention from investors. These stocks, subject to compulsory delivery with a T+1 settlement, present unique characteristics that set them apart from regular trading options. What distinguishes T2T stocks is the prohibition of intraday trading and BTST (Buy Today Sell Tomorrow) transactions. Understanding the nuances of T2T stocks is essential for any investor looking to navigate the intricacies of the market.
The categorization of stocks into the T2T segment is not arbitrary; it is a strategic measure taken by exchanges in collaboration with SEBI. This is aimed at monitoring highly volatile stocks or those with erratic price movements. The primary goal is to shield retail investors from the perils of excessive speculation, fostering a more stable trading environment. Stocks are regularly assessed and shifted in and out of the T2T segment based on quarterly evaluations and specific parameters.
These parameters include, but are not limited to, factors such as price-to-earnings overvaluation, price variation, market capitalization, and the absence of availability for trading in the Futures and Options (F&O) segment. It is this careful consideration of multiple variables that determines the inclusion or exclusion of stocks from the T2T segment.
Identifying T2T stocks is facilitated by the categorization into a distinct series, as implemented by exchanges. The National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) websites provide lists of T2T stocks for reference. Additionally, platforms like the Paytm Money app actively support investors by highlighting T2T stocks on the company details screen and order entry screen, offering users valuable insights for informed decision-making.
For those considering trading in T2T stocks, it is imperative to remember the key characteristics: compulsory delivery, the restriction on intraday and BTST trades, and the likelihood of order rejection if attempting to sell before completing T+1 settlement. These precautions ensure that investors approach T2T stocks with a clear understanding of the associated constraints and opportunities.
In conclusion, T2T stocks occupy a distinctive space in the stock market, necessitating a nuanced approach from investors. By staying informed about the regulatory framework, regularly checking T2T stock lists, and leveraging user-friendly platforms, investors can navigate the complexities of T2T trading with confidence. However, it is crucial to acknowledge the inherent risks in the securities market and exercise due diligence before making any investment decisions, as highlighted in the provided disclaimer.
