What does settlement cycle mean?
Indian stock exchanges followed a T+2 settlement cycle for equity and T+1 for F&O. However, all instruments are 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 refers to the time taken for a trade to be settled. The settlement cycle for all the instruments traded on the Indian exchanges is T+1 day, where T stands for the trading day.
Example scenario (Equity segment)
Buying shares.
- Shares are bought on Monday (T day).
- They get credited to the demat account on Tuesday (T+1 day).
Selling shares.
- Shares are sold on Monday (T day).
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Funds get credited to the trading account on Tuesday (T+1 day). Funds can be withdrawn from the trading account after Tuesday evening.
Example scenario (F&O segment)
- A long/short futures or short position is initiated on Monday (T day).
- Any credit obligation of funds in the form of Mark to Market (MTM) or premium gets settled to the trading account on Tuesday (T+1 day). Funds can be withdrawn from the trading account after Tuesday evening. Any debit obligation of funds is settled on the same day, i.e. T day from the 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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