ALL YOU WANTED TO KNOW ABOUT T2T STOCKS

By Ruma Dubey

Trading in simple parlance means buying and selling. But sometimes, we come across various jargons, especially in the stock market, various categories of trades which makes it difficult to understand the method of trading itself.

Today morning, traders woke up to the news that effective 31st Aug, BSE will shift 74 stocks in the Trade-to-Trade basis or T2T segment to take preventive surveillance measure to ensure market safety and safeguard the interest of investors. But the BSE at the same time has also clarified that this move should not be construed as an adverse action against the company; it is a temporary measure and will be periodically reviewed depending on the market conditions. Despite the reassurance, stocks like Wockhardt, SKS Micro, Reliance Broadcast, Mastek, Heidelberg Cement, Fame India, Ashapura Minechem, Birla Cotsyn, Autolite and many more tanked due to their transfer to T2T.

So what exactly is this T2T.  As we had mentioned in our column, Pathshala, Trade-to-trade (T2T) or T segment on BSE is segment in which no intra-day trading is allowed for shares falling in that segment, as each trade results in delivery. Transactions placed in this segment have to be mandatorily settled on gross basis i.e. by taking or giving delivery even if you have bought and sold the shares during the same settlement cycle.

To make it easier, highlights of T2T stocks:

• If you buy shares, you must pay the money and take delivery.
• If you sell shares, you must give the delivery of shares and you will get money.
• If you buy today and sell today and don’t have delivery, then the sell position will go in to auction and you will have to pay heavy penalty.
• A VaR Margin of 100% will also be levied on these scrips.
• These stocks have a lower circuit filter or 5% or lower as applicable.
• Intra day netting off/ squaring is not allowed
• Stocks showing excessive volatility are shifted to this category
• Newly listed stocks are traded under T2T for first 10 days from listing date
• These shares will show in your demat account only after 2-3 days
• T2T stocks are placed in a separate group/series - BE Series on the NSE and T Group on the BSE.
• Institutions usually do not hold T2T stocks

There are few stocks coming out of T2T too; so what is the advantage? Mainly, intra-day traders can now participate in the share, since there is netting of positions for delivery, unlike in T2T. But playing on this theme alone can be self-defeating.