*SEBI Introduces T+2 Day Trading for Bonus Shares: A Game Changer for Investors*
The Securities and Exchange Board of India (SEBI) has issued a circular announcing the introduction of T+2 day trading for bonus shares, effective October 1, 2024. This move aims to enhance market efficiency, reduce volatility, and protect investor interests.
*What is T+2 Day Trading?*
T+2 day trading refers to the settlement cycle where securities and funds are exchanged between buyers and sellers within two days of the trade execution date. In the context of bonus shares, T+2 day trading enables investors to trade their bonus shares two days after the record date.
*Benefits of T+2 Day Trading for Bonus Shares*
The introduction of T+2 day trading for bonus shares offers numerous benefits to investors, including:
*Reduced Market Volatility*
By enabling trading of bonus shares within two days of the record date, SEBI aims to minimize potential losses for investors.
*Increased Efficiency*
The streamlined process facilitates faster credit and trading of bonus shares, making the market more efficient.
*Better Investor Protection*
The new guidelines protect investors from potential fraudulent activities and provide quicker access to liquidity.
*Key Guidelines for Issuers*
SEBI has proposed the following guidelines for issuers:
*Notification to Stock Exchanges*
Issuers must notify the stock exchanges of their decision to issue bonus shares within five working days from the date of the board meeting approving the bonus issue.
*Allotment of Bonus Shares*
Bonus shares must be allotted to demat accounts of investors the next working day after notification.
*Trading of Bonus Shares*
Bonus shares must be made available for trading on the next working date of allotment, which is T+2 days.
*Implications and Impact*
The introduction of T+2 day trading for bonus shares is expected to:
*Enhance Market Transparency*
By reducing the time gap between bonus share issuance and trading, SEBI promotes transparency.
*Increase Investor Confidence*
The new guidelines protect investor interests and provide quicker access to liquidity.
*Streamline Market Operations*
The streamlined process reduces administrative burdens and enhances market efficiency.
*Conclusion*
SEBI's decision to introduce T+2 day trading for bonus shares marks a significant milestone in Indian capital market regulation. This move is expected to promote transparency, efficiency, and investor protection, ultimately benefiting investors and market participants alike.
