Introduction
In
an attempt to curb speculative trading, the exchanges move stocks to the “Trade
to Trade”, “T2T” or “T” segment. The NSE and the BSE, do this in consultation
with the Securities Exchange Board of India (SEBI).
The move is a part of preventive surveillance
measures taken by the exchanges to safeguard the interest of investors.
Criteria for Shifting Scrips to
‘Trade to Trade’ segment
·
The criteria for shifting scrips
to/from Trade for Trade segment are decided jointly by the stock exchanges in
consultation with SEBI.
· This criterion is listed on
their respective websites and reviewed periodically.
·
As on the review date, the
security should have been in the 5% price filter band for at least 22 trading
days. If a scrip does not meet this criterion, it cannot be moved to the “T”
segment.
Impact on Trading
- In this segment, no speculative / intraday trading is
allowed.
- Delivery of shares and payment of the consideration amount
are mandatory.
- Each trade has to result in delivery, even if you have
bought and sold the shares during the same settlement cycle.
- To sum up, in the ‘T2T’ segment:-
- If
you buy shares, you have to pay the money and take delivery.
- If
you sell shares, you have to give the delivery of shares and you will get
the money.
- No netting off is allowed, which means if you buy today and also sell today, the sell position will go into auction, as you will not be able to give delivery, and you will have to pay a very heavy penalty.
Should one invest in stocks in
‘T2T’ segment or stay away?
·
It must be understood by traders,
that because of the points listed above, the volume in these scrips is
therefore all delivery volume, which is, in fact, a good measure of ‘true
interest’ activity, to some extent.
·
A high delivery volume could mean
that a large number of investors are willing to buy and hold the scrip.
·
The “T2T’ segment is not the worst
segment for a scrip to be in. In fact, you are protected with regard to price
movement and complete speculation.
·
The ‘Z’ group and not the ‘” T2T’ the group is the worst, and the one to be avoided. This was introduced by BSE in
July 1999 and includes companies that have failed to comply with the listing
requirements or have failed to resolve investor complaints or have not made the
required arrangements with the depositories for the Demat of their securities.