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Settlement Cycle
June 07 , 2012

Settlement is the process by which the process of buying and selling of shares, and the funds transfer, are completed. Indian stock exchanges follow what is called a T+2 settlement cycle, as shown below.

Lets say you placed an order for buying a share on a particular trading day, called T day. In such a case, your broker will only block an amount from your trading account that corresponds to the payment to be made for this purchase. The actual transfer of funds, and the shares into your demat account happen on T+2 day, i.e. two working days later. The process involved in all this, involving the buyer, seller, broker and exchange, is called settlement.

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