Settlement Cycle

  • What is Settlement Cycle?

    • In trading, there is a fixed time period for the settlement of trades as per terms of contract. This time period is termed as Settlement Cycle.
    • For equity trades: Currently all trades are settled on T+2 settlement cycle. 
    • For derivatives/currency/commodities: Currently all trades are being mark to market at the closing price of contract and mark to market requirement are settled at T+1.
    • For arriving at the settlement day all intervening holidays, which include bank holidays, NSE holidays, Saturdays and Sundays are excluded.
  • What are the types of settlements?

    There are three types of settlements:
    • Rolling/Normal Settlement
    • Trade-to-Trade Settlement
    • Auction
  • What is the meaning of Rolling/Normal Settlement?

    A Settlement Cycle refers to a calendar according to which all purchase and sale transactions done on T Day are settled on a T+2 basis.  T = Trading Day and +2 means 2 consecutive working days after T (excluding all holidays). It simply means that if the customer buys share on 3rd Sept 2012 = T, Then the transaction will be settled on 5th Sept 2012 = T+2. At NSE and BSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day.
  • What is the meaning of Trade-to-Trade Settlement?

    • Trade to Trade settlement is a segment where shares can be traded only for delivery. It means Trade to Trade shares cannot be traded on intraday basis. Each share purchased /sold which is a part of this segment need to be taken delivery by paying full amount
    • No intraday netting off/square off facility is permitted.
  • What is the meaning of Auction?

    When the seller is unable to deliver the shares, the exchange initiate's an auction to purchase the required quantity of the same share in the auction market and give it to the buyer.
  • What is the process of Auction at Exchange level?

    • In case an investor fails to deliver the shares sold in the Rolling Settlement, an auction is conducted of the quantity short delivered/ not delivered on T+2, to meet the obligation of delivery of shares to the buyer. In this auction session, offers are invited from fresh sellers for quantities short delivered.
    • The Member through whom one has sold the shares is not allowed to offer shares in the scrip for which he has failed to make delivery.
    • If the seller fails to deliver the shares, penalty will be charges by the Exchange.
  • Can I sell the shares in NSE which are bought in BSE?

    • In case you place an intraday order; it has to be in the same exchange. You cannot buy the shares in NSE and sell in BSE.
    • If you already have shares in Demat account; then you can sell in any exchange irrespective whether bought in NSE or BSE.
  • What are Auction Settlement Charges ?

    • 1% Auction settlement charges are levied on auction rate.
    • In case of Market Auction, Auction rate are provided by Exchange and plus 1% Auction settlement charges is levied on the same.
    • In case of Internal Auction, Auction rate are consider the buy rate of share bought and plus 1% Auction Settlement charges is levied on the same.
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