Regulation T2T Trade-to-Trade Settlement

Trade-to-Trade segment rules

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The Trade-to-Trade (T2T) segment is a settlement framework where every trade must result in delivery; no intraday squareoff is permitted, no inter-day netting. T2T is used as a surveillance restriction on scrips with elevated speculative activity or governance concerns.

How T2T works

Normal segment: Trades match continuously during the day; intraday positions can be opened and closed within the session (MIS). Inter-day positions are netted before delivery.

T2T segment: Each buy is treated as a separate trade requiring delivery; each sell requires delivery from the seller’s demat. No squareoff is possible.

AspectNormalT2T
Intraday MISAllowedNot allowed
BTSTPossibleNot possible (one trade = one delivery)
Inter-day nettingYesNo
SettlementT+1T+1
Order typesAllRestricted to CNC delivery

Why scrips are put in T2T

T2T placement is part of the ASM and GSM surveillance frameworks. Triggers include:

  • LT-ASM Stage 2 or above automatically moves the scrip to T2T.
  • GSM Stage 4 or above typically moves to T2T.
  • Discrete regulatory action by SEBI on the company.
  • Court / NCLT orders affecting trading.

The scrip stays in T2T until the surveillance condition normalises.

Implications for retail traders

No intraday speculation

On a T2T scrip, you cannot buy and sell on the same day. Every buy requires full delivery into demat; every sell requires settled delivery from demat.

For Zerodha clients, the Kite order ticket restricts T2T scrip orders to CNC product type only. MIS orders are rejected.

Limited liquidity

T2T scrips often have thinner liquidity than normal-segment scrips, because intraday participants are excluded. Bid-ask spreads can be wider; market orders execute at worse prices.

Exit difficulty

If you hold a scrip that enters T2T:

  • Selling requires the delivery flow (CNC sell).
  • Settlement is T+1; proceeds available next trading day.
  • Liquidity may be thin; large positions may need to be sold in pieces.

Penalty for failed delivery

Because every trade must settle by delivery, failed delivery (where the seller cannot deliver) triggers an auction. The auction price is typically a premium to LTP; the failed seller pays the auction-price differential plus penalties.

For details: Auction market on NSE / BSE , Short delivery on Indian exchanges .

Where to see the T2T list

  • NSE: nseindia.com > Market data > Trade-to-Trade segment.
  • BSE: bseindia.com > Reports > T2T segment.
  • Updated daily post-market.

The list updates frequently as scrips enter and exit T2T.

Cross-reference with ASM stages

StageT2T applies?
LT-ASM Stage 1No (intraday still allowed)
LT-ASM Stage 2Yes
LT-ASM Stage 3Yes
LT-ASM Stage 4Yes (plus Periodic Call Auction)
GSM Stage 1-3Generally no
GSM Stage 4-6Yes

A scrip on Stage 2 or above of either framework is in T2T.

How long T2T lasts

T2T duration depends on the underlying surveillance trigger:

  • ASM Stage 2: Typically 1-3 months minimum.
  • ASM Stage 3-4: Can extend 6-12 months.
  • GSM Stage 4-6: Can be longer (some scrips have been in T2T for years).
  • Court / NCLT-driven: Until the legal proceeding is resolved.

The scrip exits T2T when the surveillance condition normalises and the exchange clears the listing.

Implications for portfolio management

For long-term investors:

  • A holding entering T2T is a signal to review fundamentals.
  • Restricted exit may force longer-term holding.
  • Liquidity premium / discount affects mark-to-market value.

For active traders:

  • T2T scrips are essentially off-limits for intraday strategy.
  • Position sizing should account for the exit-difficulty in case of adverse moves.

See also

External references

References

  1. SEBI, Trade-to-Trade segment framework, sebi.gov.in.
  2. NSE India, Trade-to-Trade segment operational guidelines, nseindia.com.
  3. BSE India, T2T segment circulars, bseindia.com.
  4. Zerodha Support, Trading T2T scrips on Kite, support.zerodha.com.

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