- Date : 24/08/2023
- Read: 3 mins
Trade-to-trade stocks are those in which you cannot trade on an intraday basis. When you buy such stocks, you have to take their delivery, after which you will be allowed to sell them. Know what these stocks are and what they entail.
Every fortnight, the major stock exchanges of India, the NSE (National Stock Exchange) and the BSE (Bombay Stock Exchange) move specific stocks to the trade-to-trade segment. This bars intraday trading on such stocks till they stay in the trade-to-trade segment. These stocks are called trade-to-trade stocks, wherein you are required to take delivery of the stocks purchased before you can sell them again. For instance, stocks of Jio Financial Services were placed in T2T segment as they made their debut on the stock exchange. While trade-to-trade stocks (T2T stocks) protect against heavy speculations, you should know their important aspects before investing in them.
Highlights
- Trade-to-trade stocks are those which are traded on a delivery basis. Intraday trading on such stocks is not possible.
- In consultation with SEBI, the stock exchange decides which stocks would be moved to the trade-to-trade segment.
- The trade-to-trade segment has been established to control unnecessary speculation and price manipulation.
- Delivery of trade-to-trade stocks happens on a T + 2 basis, after which you can sell them on the exchange.
What is a Trade-to-Trade Stock?
A trade-to-trade stock is one which requires actually delivery of the stock in your Demat account before you can sell it.
For example, say you buy 100 T2T shares of Company A on 22nd August 2023. The stocks will be credited to your Demat by the 24th or 25th of August. Once they are credited, you can either sell them off or stay invested. You will not be allowed to sell the shares anytime before the 24th or 25th of August since intraday or BTST (Buy Today, Sell Tomorrow) trading is prohibited.
Also Read – Know some day trading strategies for beginners
Which Stocks Qualify for the Trade-to-Trade Segment?
The choice of stocks to be moved to the T2T segment depends on the stock exchange and the regulator. Usually, factors like the price-earnings ratio, market capitalisation, and price variation are considered when choosing stocks for the T2T segment.
Things to Remember When Investing in T2T Stocks
If you are thinking of investing in T2T stocks, here are a few points to know –
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The list of eligible T2T stocks is on the NSE’s website.
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The full value of the T2T stock purchased would have to be paid to complete the trade.
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When selling T2T shares, make sure that they are reflected in your Demat account, or else your transaction would be rejected.
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When stocks qualify for the T2T segment, their circuit calculation is fixed at + or -5% to ensure stability.
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The Bottom Line
Understand what T2T stocks are and how they work. Remember the aforementioned points when investing in such stocks so that you can make prudent decisions.
Also Read – Know how to choose stocks for intraday trading
Disclaimer: This article is intended for general information purposes only and should not be construed as insurance or investment or tax or legal advice. You should separately obtain independent advice when making decisions in these areas.
