New stocks added to the Trade-to-Trade (T2T) list

The exchange has laid out a set of criteria to transfer shares from the normal rolling settlement category to the trade to trade (T2T) category. As long as a stock is in the normal rolling settlement cycle, it is possible to do intraday trading in such stocks. However, in the case of T2T stocks, any transaction (be it a buy or a sell transaction) can only be for mandatory delivery. Intraday trading of any kind is not possible in T2T stocks.

How and why are stocks shifted to T2T segment?

One of the primary reasons for moving stocks to the T2T segment is when the exchange sees too much of volatility in a stock. The shift to T2T segment does away with the intraday trading volumes and brings down the volatility in the stock automatically. However, there are also other criteria based on which the stocks are moved to and from the T2T segment.

Typically, the stocks in Trade for Trade or T2T segment are available for trading under BE series. The rolling settlement stocks are classified as (EQ) group stocks while the list of T2T stocks is classified as (BE) group stocks. The shifting scrips into or out of the T2T segment are decided jointly by the Stock Exchanges in consultation with SEBI and reviewed periodically. The exercise to identifying stocks into the Trade for Trade or T2T segment is done on a fortnightly basis while securities moving out of Trade to Trade is done on a quarterly basis. The shifting of stocks to the T2T segment is based on 3 conditions as under and all these three conditions have to be satisfied for the stock to be moved to T2T segment.

1. If the Price Earnings Multiple or the P/E ratio is less than 0 or greater than or equal to a certain specified upper limit, subject to a minimum of 25 as on the relevant date, it is a criterion for shifting to T2T.
    

2. If the fortnightly Price Variation is greater than or equal to Sectoral Index* or Nifty 500 Index Fortnightly Variation plus 25% subject to a minimum of 10%.
    

3. Finally, if the market capitalization of the stock (outstanding number of shares X current market price of the stock) is less than or equal to Rs. 500 crores on the relevant date.

There are some exceptions to the above rule. For example, stocks with dynamic price bands and stocks transferred out of T2T to rolling settlements in quarterly review (in immediate fortnight) would not be subjected to this criterion.

Stocks shifted to the T2T segment

As per the exchange circular, the following list of stocks will be shifted to the trade to trade (T2T) segment of the capital markets. Such stocks will be in the BE segment and subjected to mandatory delivery on the buy and sell side. The shift will be effective from 20th April 2023 and the below stocks would be subjected to a price band of 5%, either way. In all the 37 cases below the shift to T2T has happened due to the stock meeting all the 3 criteria of P/E multiple, price variation and market capitalization.

Effective from 20ths April, these stocks would only be available for trading in the BE (T2T) with mandatory delivery on the buy side and the sell side.

Stocks that will continue to trade in the T2T segment

The NSE, in its circular, has also disseminated the list of 23 stocks that will continue to trade in the T2T segment. These stocks did not meet the criteria to shift back from T2T to the normal rolling settlement. They will continue to trade on mandatory delivery with daily price bands of 5% either way.

All the above changes will be effective from 20th April 2023 and would continue to be applicable till further information is received from the stock exchanges.