NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Clearing Process
A broker's client buys 200 shares at Rs 500 under the T+1 rolling settlement. The trade is executed on Monday and there are no holidays that week. On which day will pay-in and pay-out for this trade normally take place, and what is the funds obligation?
Settlement occurs on Tuesday and the funds obligation is Rs 1,00,000. Under T+1 a Monday trade settles the next working day, and the value is 200 shares multiplied by Rs 500, giving Rs 1,00,000.
- ATuesday; Rs 1,00,000Correct
- BWednesday; Rs 1,00,000
- CTuesday; Rs 10,000
- DMonday; Rs 1,00,000
Explanation
Under T+1 settlement, a trade done on Monday settles on Tuesday. The value is 200 x 500 = Rs 1,00,000, so the funds pay-in is Rs 1,00,000 for the buyer. Wednesday would be T+2, and Rs 10,000 is a miscalculation of value.
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