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

Ravi buys shares of a listed company on the NSE cash segment on Monday. Assuming no holidays and the standard T+1 rolling settlement cycle, by when will the pay-in and pay-out for this trade normally be completed?

Under the T+1 rolling settlement cycle, a trade executed on Monday is settled on Tuesday, the next trading day, with no holidays intervening. Same-day settlement is not the standard, T+2 was the older cycle, and weekly settlement is not used.

  1. AOn Monday itself, the same day as the trade
  2. BOn Tuesday, the next trading dayCorrect
  3. COn Wednesday, two trading days after the trade
  4. DOn Friday, the end of the trading week

Explanation

Under T+1 rolling settlement, trades done on day T are settled on the next working day. A Monday trade therefore settles on Tuesday. T+2 would give Wednesday, which was the earlier cycle, and weekly settlement is not followed in the cash market.

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