Settlement
Also called: T+1, T+1 settlement
The process of actually delivering shares to the buyer and money to the seller after a trade, a set number of working days later.
When an order is matched, the trade has taken place, but shares and money have not yet moved. Settlement completes the trade: the clearing corporation ensures the buyer's demat account receives the shares and the seller receives the money.
The settlement cycle is written as T+1, T+2 and so on: the number of working days after the trade date (T) on which the trade settles. SEBI and the exchanges set the cycle, and it has become shorter over the years as systems have improved.
Learn more in these lessons
- How stock exchanges workHow does a stock exchange match buyers and sellers?
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