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NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Introduction to the Securities Market

An investor buys 200 shares of a company on a Monday under the T+1 rolling settlement cycle on the exchange. Assuming no holidays intervene, on which day is the pay-in and pay-out of securities and funds due?

Settlement is due on Tuesday, one business day after the Monday trade, because equity trades follow the T+1 rolling settlement cycle. Wednesday would reflect the older T+2 cycle, and neither same-day nor weekly settlement applies to normal equity trades.

  1. AMonday itself, as same-day settlement applies
  2. BTuesday, being one business day after the trade dayCorrect
  3. CWednesday, being two business days after the trade day
  4. DFriday, being the end of the weekly cycle

Explanation

Under T+1 rolling settlement, trades done on day T are settled on the next business day. A Monday trade therefore settles on Tuesday. Wednesday would be T+2, the older cycle, and weekly cycles are not used.

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