What does the settlement cycle mean?

What does the settlement cycle mean?

The settlement cycle denotes the duration required for a trade to be completed. On Indian security exchanges, this cycle for all traded items is termed as T+1 day, where T denotes the trading day. In the event of a settlement holiday, the settlement process extends by an additional day. 

For example,

In the Equity segment:

·        When purchasing shares on Monday (T day), they are credited to your demat account by Tuesday (T+1 day).

·        If selling shares on Monday (T day), the sale proceeds are credited to your trading account by Tuesday (T+1 day). However, withdrawal of these funds is permitted only after Tuesday evening.

In the F&O segment:

·        Upon initiating a long/short futures or short position on Monday (T day), any credit obligation like Mark to Market (MTM) or premium is settled to your trading account by Tuesday (T+1 day), with withdrawal possible after Tuesday evening. 

·        Debit obligations from your trading account are settled on the same day, i.e., T day.


    • Related Articles

    • What is Delivery Margin on Physical Settlement?

      The stocks that have been identified for physical settlement would attract the delivery margin as is currently being done in the Capital market segment. These margins will be part of the initial margin that would be additionally collected by the ...

    • What is physical settlement in MCX?

      The Multi Commodity Exchange of India (MCX) offers physical settlement for certain commodity futures contracts. Physical settlement means that upon the contract's expiry, the seller must deliver the actual commodity, and the buyer must take delivery ...

    • What is a Quarterly Settlement Payout Process?

      Quarterly Settlement Payout Process means that every three months, according to SEBI rules circular view, any money in your trading account will be sent back to your primary bank account. This happens on the first Friday of January, April, July, ...

    • Why do I see a change in the settlement amount?

      Comprised of market price and accrued interest, bond price, also known as settlement amount is displayed on the website. Changes in the settlement amount for bonds can occur due to fluctuations in market prices, adjustments for accrued interest, ...

    • What is a settlement holiday and its impact?

      Settlement holidays are when the markets are operational, but the depositories, NSDL and CDSL, are not. These days, auction markets are closed. You can find a list of upcoming settlement holidays on the 5paisa holiday calendar. A settlement holiday ...