What does settlement cycle mean?
The settlement cycle refers to the time taken for a trade to be settled, and it’s different for equities and F&O.
Settlement cycle for equity segment.
The settlement cycle for equity is T+2 days. But in 2021, SEBI announced the introduction of T+1 rolling settlement ( PDF ) in a phased manner. Stocks ( DOC ) have been moved to T+1 settlement from 25th Feb, 2022.
Example scenario of T+2 settlement.
Buy example:- You buy stocks on Monday (T day).
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The stocks get credited to your demat account on Wednesday (T+2 day).
- You sell stocks on Monday (T day).
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Funds get credited to your trading account on Wednesday (T+2 day). You can withdraw the funds post this.
Example scenario of T+1 settlement.
Buy example:
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You buy stocks on Monday (T day).
- The stocks get credited to your demat account on Tuesday (T+1 day).
Sell example:
- You sell stocks on Monday (T day).
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Funds get credited to your trading account on Tuesday (T+1 day). You can withdraw the funds post this.
Settlement cycle for Futures and options (F&O) segment.
The settlement cycle for F&O segment is T+1 days.
Example scenario
- You close or initiate a long/short futures or short position on Monday (T day).
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Any credit obligation of funds in the form of Mark to Market (MTM) or premium gets settled to your trading account on Tuesday (T+1 day). You can withdraw the funds post the settlement. Any debit obligation of funds is settled on the same day, i.e. T day from your trading account.
It will take an additional day for the settlement process if there’s a settlement holiday. See
What is a settlement holiday and its impact?
,
Market holiday calendar 2022
.
Read more about clearing and settlement on Varsity by visiting zerodha.com/varsity/chapter/clearing-and-settlement-process.
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