The settlement refers to the official transfer of shares from the seller's account to the buyer's account. Earlier, India was following T+2 settlement and has now adopted T+1 settlement.
- T+1 means that trade-related settlements must be done within one day of the transaction's completion.
- Trades on Indian stock exchanges are currently settled in two working days after the transaction is completed (T+2).
- For example, if you buy shares on Wednesday, they will be credited to your Demat account by the next day, which is Thursday.
- Now, with the adoption of (T+1) settlement, the trade gets settled within one day.
- Significance:
- Most large stock markets, like in the US, Europe, Japan, still follow the T+2 settlement cycle of trade settlement.
- India has now become the second country after China to go for T+1 settlement.