Module 1   Introduction to Stock Market (video series)Chapter 7

Clearing and Settlement Process

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7.1 – Clearing and Settlement

While clearing and settlement are pretty theoretical, it is essential to understand the mechanics behind them. As a trader or an investor, you need not worry about clearing and settling the trades. There are professional intermediaries to carry out this function seamlessly.

However, the lack of understanding of the clearing and settlement process could leave a void and give a sense of completeness to the learning process. Hence, for this reason, we will explore what happens behind the scene from the time you buy a stock to the time it hits your DEMAT account.

 

After learning the settlement process, let’s understand the various corporate actions.

We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.


Key takeaways from this chapter

  1. The day you make a transaction, the trade date, is represented as ‘T Day.’
  2. The broker is required to issue you a contract note for all the transactions carried out by the end of T day.
  3. When you buy a share, the same will be reflected in your DEMAT account by the end of T+2 days.
  4. All equity/stock settlements in India happen on a T+2 basis.
  5. The shares are blocked immediately when you sell shares, and the sale proceeds are credited again on T +2 days.

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