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

A broker's client buys shares on Monday in a T+1 rolling settlement segment. Assuming no holidays, on which day will the client's trade normally be settled, with the securities and funds pay-out occurring?

The trade will normally settle on Tuesday. Under T+1 rolling settlement, a trade executed on day T is settled on the next working day, so a Monday purchase has its funds and securities exchanged on Tuesday if no holiday intervenes.

  1. AMonday itself
  2. BTuesdayCorrect
  3. CWednesday
  4. DThursday

Explanation

Under the T+1 rolling settlement cycle, a trade done on day T is settled on the next working day. A Monday trade settles on Tuesday when there are no holidays between them. Wednesday or later corresponds to T+2 or longer cycles, which no longer apply to the equity segment.

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