When does settlement takes place?

Settlement is the process of transferring securities from seller to buyer and the transfer of funds from the buyer to the seller. The settlement cycle is the time required for a trade to be settled. Currently on Indian exchanges, the settlement cycle for all traded instruments is T+1 day, where T represents the trade day.

Equity Segment:
When shares are bought on Monday (T day), they are credited to the demat account on Tuesday (T+1). When shares are sold on Monday, the funds are credited on Tuesday.

F&O Segment:
If a futures or options position is taken on Monday (T day), any credit from MTM or premium is added on Tuesday (T+1). Any debit is settled on the same day, Monday.

Thus, T + 1 day (the next working day) is the settlement day, except in cases where there is a settlement holiday on T + 1 day. In such cases, trades will settle on the next working day after the settlement holiday.You can see the list of settlement holidays here.

Let’s understand the settlement day with an example of a week where Thursday is a settlement holiday :