What does settlement cycle mean?

The settlement cycle refers to the duration required for a trade to be fully settled. In Indian exchanges, the standard settlement cycle for all traded instruments is T+1 day, where T denotes the trading day.

Example Scenario (Equity Segment):

Buying Shares:

• Monday (T day): Shares are purchased.
• Tuesday (T+1 day): The shares are credited to the demat account.

Selling Shares:

• Monday (T day): Shares are sold.
• Tuesday (T+1 day): The funds from the sale are credited to the trading account. These funds can be withdrawn from the trading account only after Tuesday evening.

Example Scenario (F&O Segment):

• Monday (T day): A long or short futures position is initiated.
• Tuesday (T+1 day): Any credit obligations, such as Mark to Market (MTM) adjustments or premiums, are settled to the trading account. These funds can only be withdrawn after Tuesday evening.
• Any debit obligations are settled on the same day, i.e., T day, directly from the trading account.