What does settlement cycle mean?
All instruments have moved to a T+1 settlement cycle from 27th January 2023. To learn more, visit tradingqna.com/t/change-in-settlement-cycle-for-all-securities-from-friday-27th-january-2023/142552
The settlement cycle is the time required for a trade to be settled. On Indian exchanges, the settlement cycle for all traded instruments is T+1 day, with T representing the trading day.
Example scenario (Equity segment)
- On Monday (T day), shares are purchased.
The shares are credited to the demat account on the following day, Tuesday (T+1 day).
- On Monday (T day), shares are sold.
On Tuesday (T+1 day), the funds are credited to the trading account. These funds can be withdrawn from the trading account only after Tuesday evening.
Example scenario (F&O segment)
- On Monday (T day), a long/short futures or short position is initiated.
On Tuesday (T+1 day), any credit obligation of funds in the form of Mark to Market (MTM) or premium is settled to the trading account. These funds can be withdrawn from the trading account only after Tuesday evening. Any debit obligation of funds is settled on the same day, i.e. T day from the trading account.
If there's a settlement holiday, the settlement process will take an additional day. To learn more, see What is a settlement holiday and its impact?