Starting January 27, all shares in the Indian markets will switch from T+2 to a shorter T+1 settlement cycle, in which trades will settle just one day after they are made. Structurally, it will make India one of the most progressive and transparent stock markets in the world. It is the latest of India’s stock market reforms which began in 2001 with the ban on badla, the trade pass through mechanism on the BSE, after the Ketan Parekh scam. Badla gave way to equity derivatives, and index options are now the most popular futures and options (F&O) product on the NSE. It signals the maturity of investors and traders in India who understand the nuances of the stock market much better, preferring the less volatile index options over stock futures and riskier stock options.
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