Shifting of stocks to the Trade to Trade (T2T) segment

The exchange from time to time shifts stocks that may get too speculative into the trade to trade segment or the T2T segment. The special thing about the T2T segment is that stocks in the T2T segment are on a pure delivery basis and one cannot do intraday trading in these stocks. For instance it is not possible to buy these T2T stocks in the morning and sell it on the same day. Similarly, it is not possible to sell these stocks and then buy it back on the same day. Any purchase or sale transaction in these T2T stocks has to be for mandatory delivery only. They have to either go into your demat account or get debited to demat.

On 14ths November, the exchange released a list of stocks that will be moved from the rolling settlement to the T2T settlement system. In addition, the exchange also released a list of stock that would continue to remain in the T2T segment. The idea here is to reduce unwarranted speculation in such stocks, where the exchange sees the potential of price distortions due to excess speculation. Also, when too much speculation is expected, it is a move to protect investor interest by transferring such stocks to the T2T basis so that investors can only buy or sell the stock for delivery.

Latest Trade to Trade (T2T) list released by the NSE

The following is the list of 11 securities that will be shifted from the current Rolling segment (series: EQ) to the Trade for Trade (T2T) segment (series: BE) with a price band of 5% or lower. This shift will be with effect from Thursday, November 17th, 2022.

Data Source: NSE

The following is the list of 3 securities that will continue to be available for trading in Trade for Trade (T2T) segment with a price band of 5% or lower as applicable (series: BE/BZ) due to Surveillance action as eligible under the current fortnightly review.

Data Source: NSE

Let us also quickly look at the criteria on which companies are added to the T2T list by the stock exchanges.

Criteria for shifting stocks to T2T

There is a fortnightly review and a quarterly review on criteria that is almost similar. We will focus on the more popular fortnightly review of stocks to decide whether a stock should be shifted to the T2T segment or not. Only stocks satisfying all the criteria below shall be transferred to the Trade for Trade (T2T) segment.

1. P/E condition: This condition states that of the price earnings multiple (P/E) ratio is less than 0 or greater than or equal to upper limit subject to a minimum of 25 as on the relevant date. (If Nifty P/E on the relevant date is in range of 15-20X, then the upper limit will be 30. If Nifty P/E >20 or <15 then the difference rounded off to nearest number will be added to or subtracted from 30).
    

2. Price Variation Condition: If the Fortnightly Price Variation (FPV) is greater than the relevant Sectoral Index variation or Nifty 500 Index Fortnightly Variation by over 25%, subject to a minimum of 10%. (If a particular sectoral index is only available on one of the principal exchanges, then the other exchange will also use the same to compare price variation in securities of the concerned sector for the purpose of shifting to T2T).
    

3. Market Capitalization Condition: If the market capitalization of the stock (number of shares outstanding multiplied by stock price) is less than Rs500 crores as on the relevant date, it is a case for shifting the stock to T2T segment.

It must be noted that for a stock to be shifted from the rolling settlement system to the T2T settlement system, all the above 3 conditions must be satisfied in the fortnightly review process. There are exceptions. The above criteria will not apply in the case of securities with Dynamic Price Bands and in the case of IPOs that are made available for trading in Trade for Trade segment for the first 10 trading days with applicable price band.