Trade to Trade (T2T) Stocks

Trade to Trade, or T2T, is a surveillance segment in which every transaction must result in the delivery of shares. You must pay the full purchase amount and wait for the shares to reach your Demat account before selling them.

• The settlement cycle is T+1, which generally means the next trading day.
• Intraday trading is not allowed.
• Buy and sell trades cannot be netted against each other.
• On NSE, T2T securities are generally available under the BE series.
• On BSE, these securities may appear in groups such as T, XT, MT, or TS.
• Exchanges review securities every fortnight for movement into the T2T segment. They also conduct broader quarterly reviews.
• The T2T segment is used as a surveillance measure to limit excessive speculation and unusual trading activity.
   

The Trade to Trade segment is a market segment in which every purchase and sale must be settled separately through the actual delivery of shares. You cannot offset a purchase against a sale made during the same trading day.

For example, suppose you buy 50 shares of a T2T stock in the morning and sell 50 shares in the afternoon. The two transactions will not cancel each other out. You must pay for the shares purchased and separately deliver the shares sold. This means you cannot use T2T stocks for intraday trading.

Trade to Trade stocks are shares placed under a special surveillance segment by stock exchanges. Every transaction in these stocks must be settled through delivery, and netting is not permitted.
T2T stocks generally follow the T+1 settlement cycle. However, buying a stock today does not mean you should sell it before it has been credited to your Demat account.
Stock exchanges use the T2T segment as a surveillance measure to limit excessive speculation and unusual price movements. Placement in this segment should not automatically be treated as an adverse action against the company.
On NSE, T2T securities are generally traded under the BE series. On BSE, trade-to-trade securities may be placed in groups such as T, XT, MT, or TS.
 

You can identify a T2T stock by checking its trading series or group on the relevant stock exchange or your broker’s trading platform.

Under the T2T system, only delivery-based settlement is allowed. You must pay the complete purchase value when buying the shares, and you must already hold delivered shares before selling them.

If you buy and sell the same T2T stock on the same day, the exchange treats them as separate transactions:

• The shares purchased must be paid for and taken into delivery.
• The shares sold must be delivered separately from your existing holdings.
• The purchase and sale cannot be adjusted against each other.

For example, suppose you buy 100 shares and sell 100 shares of the same T2T stock during one day. You must still pay for the 100 shares purchased and deliver another 100 shares from your existing holdings for the sale.

If you sell shares without having enough delivered holdings, the transaction may result in a short delivery and could be handled through the exchange’s auction or close-out process.

Stock exchanges decide the criteria for shifting securities into and out of the T2T segment in consultation with SEBI. For a security to be shifted under the fortnightly review criteria, it generally needs to satisfy all the applicable conditions.

1. Price-to-earnings ratio

The price-to-earnings, or P/E, ratio compares a company’s share price with its earnings per share.

Under the exchange criteria, a security may qualify when its P/E is less than or equal to zero or reaches the applicable upper limit. The minimum upper-limit threshold is 25, although the actual limit changes according to the Nifty 50 P/E.

For example, when the Nifty 50 P/E is between 15 and 20, the applicable upper limit is 30.

The calculation uses earnings per share from the previous four quarters.

2. Price variation

A security may also be considered when its price movement is unusually high compared with its sectoral index or the Nifty 500 Index.

For mainboard securities, the fortnightly variation generally needs to equal or exceed the relevant index variation plus 25%, subject to a minimum variation of 10%.

For example, suppose the relevant index changes by 12% during the review period. A stock showing a variation of 37% or more may meet this particular condition.

3. Market capitalisation

Market capitalisation is the total market value of a company’s outstanding shares.

Under the stated fortnightly criteria, the limits are:

• Mainboard securities: Market capitalisation of ₹500 crore or less.
• SME securities: Market capitalisation of ₹100 crore or less.

Certain securities are excluded from the normal fortnightly review. These include newly listed securities during the specified initial trading period and securities with dynamic price bands.

A stock generally needs to satisfy all the applicable P/E, price-variation, and market-capitalisation conditions to be moved under these fortnightly criteria. Exchanges may also apply other surveillance frameworks and quarterly review conditions.

Stock exchanges conduct a fortnightly review to identify securities that should be shifted into the T2T segment under the applicable criteria.
They also conduct quarterly reviews for moving securities into or out of the segment. A stock may return to its original trading segment when it meets the applicable conditions for removal.
The exchange publishes circulars stating which securities will enter, remain in, or leave the T2T segment and the date from which the change applies.
 

Suppose a company’s shares have been placed in the Trade to Trade segment and the market price is ₹550 per share.

You decide to buy 100 shares.

• Share price: ₹550
• Number of shares: 100

• Total purchase value: ₹55,000

  
  

Because T2T transactions require delivery, you must pay the complete ₹55,000 purchase value.

Under the T+1 settlement cycle, the settlement normally takes place on the next trading day. You should sell the shares only after they are credited to your Demat account and are available in your holdings.

You cannot treat the purchase and a same-day sale as an intraday trade because netting is not permitted. The securities quoted are for example purposes only and not a recommendation.

T2T stocks require mandatory delivery. Before placing an order, make sure you have enough funds for a purchase or enough delivered shares for a sale.

1. Delivery-based settlement
You must pay the entire purchase value when buying a T2T stock. Intraday leverage or same-day adjustment of the purchase against a sale is not available.
For example, if you buy shares worth ₹25,000, you must have enough funds to meet the full settlement obligation.

2. Separate purchase and sale obligations
A purchase and sale made on the same day are treated as separate trades. The purchased shares must be paid for, while the sold shares must be delivered from your existing holdings.
Selling shares that have not yet been delivered to your Demat account may create a short-delivery obligation. This can lead to an auction or close-out under the exchange’s settlement rules.
You should therefore verify the stock’s trading category and check your available funds and holdings before placing an order.
 

The basic order-placement process is similar to trading a stock in the regular market. However, T2T trades have compulsory delivery requirements.

1. Check the stock category: Confirm that the security is listed under the relevant T2T series or group.
2. Review your funds: Keep enough money available to pay the complete value of the shares you plan to buy.
3. Place a delivery order: Enter the quantity and price through your broker’s trading platform.
4. Wait for settlement: Allow the shares to be credited to your Demat account under the applicable settlement cycle.
5. Check your holdings: Confirm that the shares are shown as delivered and available before placing a sell order.
6. Authorise the sale: Complete the required depository authorisation when selling, depending on the process supported by your broker and Demat account.

You should not sell newly purchased T2T shares before they appear as delivered holdings in your Demat account.

T2T restrictions mainly affect traders because intraday trading and netting are not allowed. Every transaction creates a separate delivery obligation.
For investors, the segment requires careful planning because the complete purchase value must be available and shares cannot be sold before delivery.
A security’s inclusion in T2T does not necessarily mean that the company is financially weak. BSE states that movement into trade-to-trade settlement is a surveillance measure and should not automatically be considered an adverse action against the company.
However, securities in this segment may have experienced unusual price movements or may meet other surveillance conditions. You should study the company’s financial position, trading volume, risks, and exchange notices before making a decision.
 

The criteria for shifting securities into or out of the T2T segment are decided by stock exchanges in consultation with SEBI.

The exchanges monitor factors such as:

• Price-to-earnings ratio
• Price variation
• Market capitalisation
• Trading activity

• Other applicable surveillance conditions

  
  

They publish notices when securities are moved into, retained in, or removed from the segment. T2T securities are settled on a gross, trade-by-trade basis, which means buy and sell positions cannot be netted.

The measure is reviewed periodically and may be withdrawn when the security meets the applicable conditions for returning to its regular trading segment.

Trade to Trade stocks require compulsory delivery, and every purchase and sale is settled separately. You cannot use these securities for intraday trading or offset purchases against sales made on the same day.
Before trading, check whether the security is in the T2T segment and ensure that you have sufficient funds or delivered holdings. You should also review the company’s fundamentals, exchange notices, price movements, and the risks involved before making a decision.