What is Trade to Trade?
market is full of speculation. The Securities and Exchange Board of India (SEBI)
is the governing body that regulates the stock market. It looks after the
interest of the traders and investors. It often happens that the traders and
investors suffer a good amount of loss
due to speculation activities in the stock market.
order to protect the interest of the shareholders, the National Stock Exchange
(NSE) and Bombay Stock Exchange (BSE) after consulting the SEBI, moved the
stocks to “Trade-to-Trade” or “T2T” or “T” segment.
understand what is Trade To Trade.
Meaning of Trade To Trade
to Trade is a segment of shares in which intraday trading of shares is
prohibited. The investor can purchase the shares only on delivery basis. While
purchasing the shares, the trader/investor needs to pay the amount in full for
the shares he purchased. Similarly, he
cannot sell the shares till he receives the delivery of the shares in his demat
account. On receiving the delivery, he can sell the shares. So the script settlement
is done on Trade to Trade basis and netting
off is not allowed for the day. In simple words, Trade to Trade does not give
the opportunity to trade in intraday. If you are a beginner in the stock market
then this article shall help you “Best Intraday Trading Tips for Beginners to Gain
take an example to understand Trade to Trade in a better way
of Trade to Trade
In regular rolling settlement, a trader can indulge
in intraday trading. He can buy and sell the same security on the same day.
However, this is not the case with securities in Trade to Trade segment.
Suppose a trader buys 1,000 shares of GMR Infra at Rs.17 and sells them on the
same day at Rs.18. Here, the trader has gained the profit of Rs.1 on 1,000
shares in intraday trading.
If the same stock i.e. GMR Infra falls under Trade
to Trade segment, the trader will have to first take the delivery of shares by
paying Rs.17,000 to the broker. Further, the trader cannot sell the shares
until the delivery of shares come in his demat account. Only when the delivery
of shares gets reflected in the demat
account, the trader is allowed to sell his holdings in the market.
National Securities Clearing Corporation Ltd (NSCCL) does not take any case of
clearing or settlement of trade executed on Trade to Trade basis on the
exchange. But there may be circumstances when the trader may take a contra
position in case of Trade to Trade securities.
In such cases, the transaction gets cancelled.
look at the cancellation of trade process and penalty thereon.
Cancellation of Trade
deal is executed in the T2T segment and the
clearing member cancels it, then the trader shall be charged with a penalty. The penalty charge for cancellation is
Rs. 1000. If the clearing member is involved in buying as well as selling, the
penalty for such trade cancellation is Rs. 2000.
case the member is unable to settle the trade due to some unavoidable reasons, he
is required to take the prior approval of NSSCL for seeking an extension of the settlement date.
is important to learn whether trading in Trade to Trade segment is safe or not.
Is Trade to Trade Segment Safe for Trading?
is good for investment if it has the
interest of buyers. One can find this out by looking at the volumes in the
stock. However, the higher volume can
lead to speculation. This led to introduction of Trade to Trade segment. When
the stock becomes the part of this segment, it becomes very safe for investment.
The reason is very simple; it gives protection to the investors against erratic
price movement and speculation.
Securities provides the facility to investors to invest in securities that are
in Trade to Trade segment. We as a leading financial advisory firm provide the facility
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