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

Ravi's broker executes a trade for him in a rolling settlement environment on the cash market. Which statement about the rolling settlement in India is correct?

Indian equity cash market follows a T+1 rolling settlement, so a trade done on Monday is settled on Tuesday if no holiday intervenes. Older account-period style settlements, such as weekly or fortnightly cycles, are no longer used for equity trades.

  1. ATrades of a trading day are settled on a T+1 basis, so a trade on Monday is settled on Tuesday, assuming no holidaysCorrect
  2. BTrades are settled only on a fortnightly basis
  3. CTrades done on any day are all settled on the following Friday
  4. DTrades are settled on T+5 for all equity shares

Explanation

Indian equity markets follow a rolling settlement cycle where each day's trades are settled after a fixed number of days. The standard cycle for equity is T+1, so a Monday trade settles on Tuesday if there are no trading holidays. Fortnightly or weekly settlement belonged to the older account period system, and T+5 is not the current cycle.

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