The Securities and Exchange Board of India (SEBI) issued a new guideline on 16 September 2024 to speed up the trading of bonus shares. According to this new rule, investors can trade in bonus shares within two working days of the record date. This arrangement will come into effect from 1 October 2024.

Current status of the rules

Currently, after the issue of bonus shares, the existing shares continue to trade under the same ISIN (Indian Securities Identification Number). It may take two to seven working days for the new bonus shares to be credited to the accounts and made available for trading. This period is without any specific deadline, which may delay the process.

Effects of the new guidelines

As per the new SEBI guidelines, trading of bonus shares can now begin within just two working days (T+2) after the record date. This will improve market efficiency and reduce delays. This change will reduce the time gap between bonus share allotment and trading, benefiting investors and issuers.

Expectations and benefits

This move of SEBI will prove to be especially beneficial for those investors who have been waiting for a long time in the process of issuing bonus shares. The implementation of the new guidelines will boost the market and improve business activities. This rule will apply to all bonus shares declared on or after October 1, 2024, thereby making the market process more effective at a wider level.