What is a Trade-to-Trade (T2T) Stock?

Last Updated: 8 Aug 2025

If you’re wondering, what is meant by trade-to-trade stock, it essentially means a stock that can only be bought or sold for delivery, not for speculative same-day trading. There are two series of equity stocks that are available to retail investors on the NSE: the EQ series and the BE series. The EQ segment includes stocks on rolling settlement. Such stocks can be squared off on the same day (both longs and shorts), but if these are not squared off, they will compulsorily result in delivery on the T+2 day. On the other hand, the BE series stocks are better known as Trade-to-Trade stocks or T2T stocks.

Unlike the EQ series stocks, the BE series T2T stocks are not available for intraday square off. This means that if you buy T2T stocks, you have to necessarily take delivery on the T+2 date. If you sell the T2T stock, you must have the stock in your demat account and be able to give delivery on the T+2 date. The whole idea of classifying stocks as T2T is to reduce speculation and price manipulation by barring such stocks from intraday trading.

On What Basis do Stocks Get Classified as T2T?

The basic intent of classifying stocks under the T2T category is to prevent too much volatility and price manipulation. This is a pronounced risk where the floating stock is small and a handful of traders controls the liquidity. Here are some facts you need to know about classifying stocks into the T2T category.

Only non-F&O stocks are considered for transfer to the T2T segment. The decision to shift shares into the T2T segment is taken every 15 days, while decisions to shift in and out of T2T are taken every 3 months. Shifting decisions are made by exchanges in consultation with SEBI.

The shifting to T2T is done based on a combination of three criteria. The first criterion is the relative P/E ratio. In case of the BSE, if the Sensex P/E is in the range of 15-20 and the stock P/E is over 30, the stock will be considered for shifting to T2T. Trailing 4 quarters EPS is considered, and even negative P/E stocks are included in this list.

Secondly, if the price variation (representing volatility) of the stock is 25% more than the Sensex or the particular sectoral index to which it is benchmarked, the stock will be considered for shifting to T2T. The variation must be in the same direction as the Sensex.

What Does Shifting to T2T Mean for Me as an Investor?

As stated earlier, when a stock is shifted to the T2T segment, only delivery trades are permitted on the stock. You cannot square up your position intraday; so, every purchase has to result in taking delivery, and every sale has to result in giving delivery of shares. Here are five interesting things about T2T stocks that matter to you.

When you buy a T2T stock, ensure that you have the funds to take 100% delivery of the stock. Similarly, when you sell a T2T stock, check that you already have delivery in your demat account. Once you sell the shares, you cannot buy them back as intraday square-off is not permitted in T2T stocks. Inability to deliver on the T+2 day means auction losses for the trader.

The broker with whom you trade normally has an in-built warning system in case of T2T stocks. However, the onus of checking for the T2T status of stocks rests on the trader, and hence, it is best to double-check funds and delivery before getting into T2T stocks.

In BTST or STBT, you essentially buy today and sell tomorrow, or you sell today and buy tomorrow. In both cases, you are taking an overnight risk on the stock. In case of T2T, because all trades have to essentially result in delivery, there is no scope for BTST or STBT trades.

What is a Trade-to-Trade Stock Segment?

The Trade to Trade (T2T) stock segment refers to a special category in the stock market where no intraday trading is allowed. In this segment, every trade must result in the delivery of shares, which means you cannot square off your position on the same day.

So, what is trade to trade stock? It’s a stock classified under the T2T segment, mandating compulsory delivery-based settlement. This ensures that only serious investors with genuine delivery intent participate, reducing price manipulation.

Criteria for Classifying a Stock as T2T

Now let’s understand what is trade to trade script and why a stock is classified under this segment. The stock exchanges, in consultation with SEBI, periodically review stocks to determine their eligibility for the T2T segment based on the following criteria:

• High volatility in stock prices without fundamental reasons
• Low market capitalization or illiquidity
• A surge in trading volumes that seems unusual
• Surveillance action by SEBI to prevent manipulation
• Stocks under investigation or grievance redressal watchlists

Hence, trade-to-trade category stock is often one under scrutiny or regulatory observation.

How Frequently Are Stocks Moved to Trade to Trade Segment?

Now that you know what is trade to trade segment, you might wonder how often the T2T list gets updated?

• NSE and BSE review T2T stocks every two weeks based on their market behaviour and risk indicators.
• Stocks may be moved into or out of the T2T segment depending on their compliance with listing norms and trading activity.
• SEBI’s surveillance measures also play a role in deciding movement based on risk and investor protection needs.

So, the trade to trade settlement framework is part of ongoing regulatory vigilance.

How to Trade in the T2T Segment?

Trading in the T2T segment stocks is different from regular equity trading:

• You must place only delivery-based buy or sell orders.
• Ensure sufficient funds or shares in your Demat account before placing orders.
• Trades are settled on a T+1 or T+2 basis, depending on exchange rules, making it important to plan your cash flow.
• Use limit orders instead of market orders for better control.

Since T2T stock settlement does not allow same-day square-offs, planning becomes critical.

Why Are Stocks Moved to the Trade-to-Trade Segment?

Let’s break down the reasons why stocks are moved to this segment, using concise bullet points:

• To curb speculative trading and manipulation of stock prices
• To protect retail investors from volatile penny or small-cap stocks
• Due to abnormal price movement or volume spikes without news justification
• Based on the exchange or SEBI directives for enhanced surveillance
• When company fundamentals are under review or management is being probed
• Stocks with poor corporate governance or audit red flags

That’s what trade to trade category stock means – it’s a caution tag from the regulator.

Who Should Trade in T2T Stocks?

So, who should consider trading in the trade to trade stock segment?

• Long-term investors looking to hold quality stocks at reasonable valuations
• High-conviction investors who believe in the business and can ride out volatility
• Not suitable for day traders or short-term speculators, given the no intraday trading rule
• Ideal for those who research thoroughly and follow delivery-based strategies

If you’re curious about what is trade to trade settlement, think of it as a structure that rewards patience and research, not impulse.

Conclusion

Understanding trade-to-trade stock is crucial for serious market participants. These stocks are part of the T2T segment, where every trade must result in delivery, eliminating intraday speculation. The trade-to-trade category stock means added regulatory vigilance, often triggered by volatility, low liquidity, or potential investor risk.

Knowing how to trade in the T2T segment can help you navigate this space with confidence. Always refer to the Stock exchange T2T list before taking positions in such stocks.