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NISM-Series-VII: Securities Operations and Risk Management · Settlement Process

Trade for Trade Segment Settlement and Corporate Actions

Updated 11 October 2026 · Fact-checked

Trade-for-Trade (T group) settles every trade on its own, with no netting, so you must take delivery of what you buy. Z group holds securities of non-compliant companies. Corporate actions depend on the record date, and the ex-date is set so that buyers who miss the record date do not get the benefit.

Understand Settlement of Other Segments and Corporate Actions

Normal rolling settlement nets your buy and sell trades in the same security on the same day. Only the net quantity is delivered. This allows intraday trading, where you buy and sell without taking delivery.

In the Trade-for-Trade (TFT) segment, there is no netting. Each trade is settled separately. If you buy, you must receive delivery. If you sell, you must deliver. You cannot square off a position within the day and settle only the difference. Exchanges place securities here to curb speculation, for example securities under additional surveillance. The settlement cycle is the same rolling cycle as the normal segment. Only the netting differs.

The Z group is for companies that have not complied with listing requirements, such as failing to resolve investor complaints or not paying listing fees. Securities in this group trade and settle on a trade-for-trade basis. Treat Z group as a tag for non-compliance, and remember it is settled without netting.

A corporate action is a company decision that affects shareholders, such as a dividend, bonus, split or rights issue. The company fixes a record date. Only investors whose names are in the records on that date get the benefit. Because delivery takes time, the exchange fixes an ex-date, the first day on which the share trades without the benefit. A buyer on or after the ex-date does not get the entitlement.

Under the T+1 rolling cycle, shares bought before the ex-date are delivered in time to be held on the record date. In a T+1 cycle, the ex-date normally falls on the record date itself, because a buyer on the day before the record date receives the shares one day later. If the record date is a holiday, the ex-date is adjusted accordingly. For an IPO, shares are allotted and credited to demat accounts after the issue closes, and listing follows. Trading in the new shares starts only after listing, and those trades settle in the normal rolling cycle for the segment where the security is listed.

Key formulas to remember

Trade-for-Trade settlement
No netting: each trade settles separately; buy ⇒ take delivery, sell ⇒ give delivery
Intraday square-off is not allowed in this segment.
Z group
Z group = non-compliant companies, settled trade-for-trade
Linked to non-compliance with listing requirements.
Ex-date under T+1
Ex-date = Record date (when the cycle is T+1 and both are trading days)
Buy on or after the ex-date: no entitlement. Buy before: entitled.
Entitlement test
Entitled if shares are in your demat account at the end of the record date
Holding is judged on the record date, not the announcement date.

How to solve Settlement of Other Segments and Corporate Actions questions

Use this method for any question on TFT, Z group, IPO or corporate action settlement.

  1. 1Identify the segment or event: normal rolling, TFT, Z group, IPO or corporate action.
  2. 2If it is TFT or Z group, remember there is no netting and delivery is compulsory.
  3. 3If it is a corporate action, find the record date and the ex-date given.
  4. 4Compare your purchase date with the ex-date. Before the ex-date means entitled. On or after means not entitled.
  5. 5Check the settlement cycle stated in the question and any holiday that shifts dates.
  6. 6Match the result to the options and discard those that mix up ex-date and record date.

Quickest way: Ex-date check in ten seconds

When to use it: Use this when a question gives dates and asks who gets the dividend, bonus or other benefit.

  1. Mark the ex-date on a quick timeline.
  2. Buy before the ex-date: you get the benefit.
  3. Buy on or after the ex-date: you do not.
  4. For TFT or Z group, ignore any answer that allows netting or intraday square-off.

Common mistakes in Settlement of Other Segments and Corporate Actions

  • Thinking you get the benefit if you buy on the record date

    Students read the record date as the cut-off for buying.

    Fix: The cut-off for buying is before the ex-date. Under T+1 the ex-date and record date are the same day, so buying that day is too late.

  • Allowing intraday square-off in the TFT segment

    Students carry over the normal rolling settlement netting rule.

    Fix: In TFT every trade settles separately, so delivery is compulsory.

  • Treating Z group as a group for high-risk new companies

    The letter feels like a risk grade.

    Fix: Z group is for companies not complying with listing requirements.

  • Mixing up ex-date and record date definitions

    Both relate to the same entitlement and sound alike.

    Fix: The record date identifies eligible holders. The ex-date is the first day the share trades without the benefit.

  • Assuming IPO shares trade straight after the issue closes

    Students skip the allotment and listing steps.

    Fix: Trading begins only after allotment, demat credit and listing.

Worked examples

Example 1

A security is in the Trade-for-Trade segment. You buy 100 shares in the morning and sell 100 shares of the same security in the afternoon on the same day. What is the settlement position?

Show the solution
  1. In TFT there is no netting.
  2. The purchase of 100 shares is settled separately and you must receive delivery.
  3. The sale of 100 shares is also settled separately and you must deliver 100 shares.
  4. So you cannot cancel the two by netting; you need shares in your demat account to deliver on the sale.

Answer: Both trades settle separately; the position is not netted, and you must deliver 100 shares against the sale.

Example 2

A company declares a dividend with the record date Friday. Under T+1 the ex-date is also Friday. Raj buys shares on Thursday and Meera buys on Friday. Who gets the dividend?

Show the solution
  1. The ex-date is Friday.
  2. Raj bought on Thursday, before the ex-date. Under T+1 his shares are delivered on Friday, which is the record date, so he is in the records.
  3. Meera bought on Friday, which is the ex-date. Her shares arrive on the next trading day, after the record date.
  4. So Meera is not entitled.

Answer: Raj gets the dividend. Meera does not.

Exam tips

  • Expect direct questions on what happens to netting in TFT and Z group.
  • Learn the one-line difference: record date identifies holders, ex-date is the first day without the benefit.
  • Read the settlement cycle in the question before applying the ex-date rule.
  • Negative marking is 25% of the marks for the question, so skip an option you cannot justify rather than guess blindly.

Practice questions from Settlement Process

Settlement of Other Segments and Corporate Actions: frequently asked questions

What is the trade for trade segment?

It is a segment where each trade is settled separately with no netting. If you buy, you take delivery. Intraday square-off is not allowed.

What is the difference between ex-date and record date?

The record date is when the company checks who holds the shares to give the benefit. The ex-date is the first day the share trades without that benefit. Buyers on or after the ex-date are not entitled.

Why is a company placed in Z group?

Z group is for companies that have not complied with listing requirements. Their securities are settled on a trade-for-trade basis.

When can I trade shares from an IPO?

Only after allotment, credit to your demat account and listing on the exchange. After listing they trade and settle in the normal cycle.