uTrade AlgosIn India, the settlement cycle for delivery trades follows a T+1 system. This means that if you buy or sell shares on a particular trading day (T), the settlement of the trade will be completed on the next trading day (T+1).
Here’s a breakdown of what happens in the settlement cycle:
- Trading Day (T): You buy or sell shares through your broker.
- T+1 Day: The shares you bought are credited to your demat account. The funds from the shares you sold are credited to your trading account.
Important points to remember:
- Trading days: These are typically weekdays (Monday to Friday), excluding market holidays.
- Settlement holidays: If there’s a holiday between the trading day and T+1, the settlement will be delayed by one day.
Example: If you buy shares on Monday (T), they will be credited to your demat account on Tuesday (T+1). Similarly, if you sell shares on Monday, the funds will be available in your trading account on Tuesday.
Why T+1 settlement?
The T+1 settlement cycle was introduced to improve efficiency and reduce risks in the settlement process. It ensures faster transfer of shares and funds, making trading more convenient for investors.