Settlement Date

Trading

Quick Definition

Settlement Date is the date on which a financial transaction is completed, meaning the buyer pays for the asset and the seller delivers it.

Detailed Explanation

The Settlement Date is when the actual exchange of securities and money happens after a trade is executed (trade date).

In stock markets, settlement follows a T+1 cycle (Trade Day + 1 working day) in India. This system is implemented by exchanges like the National Stock Exchange and Bombay Stock Exchange under regulation of the Securities and Exchange Board of India.

Key Concepts

  • Trade Date (T): Day when transaction occurs
  • Settlement Date (T+1): Day when payment & delivery are completed

Why Settlement Date Matters

  • Confirms ownership transfer
  • Ensures payment completion
  • Important for accounting and record-keeping

Settlement Date vs Trade Date

  • Trade Date: Execution of trade
  • Settlement Date: Final completion

Example

"If you buy shares on Monday (T), they are credited to your account on Tuesday (T+1)—this is the settlement date."

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