Stock Exchanges

What is the Trade to Trade Segment in Stock Exchanges ?

Kapil Marwaha · 11 July 2016 · 498 Comments
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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). Exchanges take this move as part of preventive surveillance measures 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 criteria is listed on their respective websites and reviewed periodically.
  • The security should have been in the 5% price filter band for at least 22 trading days on the review date. It cannot be moved to the "T" segment, if a scrip does not meet the criteria.

Impact on Trading

  • One cannot perform Speculative / intraday trading in this segment.
  • Delivery of shares and payment of the consideration amount are mandatory.
  • Each trade has to result in a delivery, even if you have bought and sold the shares during the same settlement cycle.
  • To sum up:-[symple_bullets style="check"]
    • 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.
    • One cannot net off, 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.
    [/symple_bullets]

Should one invest in stocks in 'T2T' segment or stay away?

  • Traders must understand that because of the points listed above, the volume in these scrips is, therefore, all delivery volume. In fact, it is 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, the price movement and complete speculation remains safe.
  • The 'Z' group (not '"T2T' group) is the worst, and should to be avoided.
  • BSE introduced this in July 1999. It includes companies which have failed to comply with the listing requirements, failed to resolve investor complaints or have not made the required arrangements with the depositories for Demat of their securities.
Kapil Marwaha

Kapil Marwaha is the Founder & Managing Director of TrueData Financial Information Pvt. Ltd..

His aim - "To make TrueData the Best Trading Decision Support company in the country." TrueData's flagship product Velocity 2.0 has already become immensely popular and is used by a large audience through out the country.

Comments (498)
true
November 01, 2017

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Sourabh Dev Burman
January 18, 2021

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