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📝 What is Settlement Cycle (T+1, T+2, T+3) in Stock Market?

🔄 What is Settlement Cycle (T+1, T+2, T+3) in Stock Market? When you buy or sell shares in the stock market, the shares or money do not get transferred immediately. This exchange of shares and money happens through a process called the Settlement Cycle. Let’s understand this in a very easy way. 🌟 📌 What is Settlement? ✔️ When you buy shares, the company’s shares must come into your Demat account. ✔️ When you sell shares, the money must come into your bank account. The time gap between placing the order and the actual transfer of shares or money is called the Settlement Cycle. 🔍 What is T+1, T+2, T+3? The term "T" means the Trading Day — the day when the actual buying or selling happens. ✔️ The number after "T" indicates how many working days later the transaction will be fully settled. Let’s break this down: 🔷 T+1 Settlement: ✅ T = Trading Day (when you place the order) ✅ T+1 = The next working day Example: You buy shares on Monday (T Day) — the shares will be delivered to your Demat account by Tuesday (T+1), and the money (if you sold) will also reach your bank on Tuesday. 🔷 T+2 Settlement: ✅ T = Trading Day (when you place the order) ✅ T+2 = Two working days after trading day Example: You sell shares on Monday (T Day) — the money will come to your bank account on Wednesday (T+2). (This system was widely used earlier in India before shifting to T+1.) 🔷 T+3 Settlement: This was the older system used many years ago where the settlement would happen after three working days from the trading day. Now, T+3 is no longer in use in India — markets have become faster and shifted to T+1. 🎯 Which Settlement Cycle is Followed in India Now? As per the latest SEBI guidelines, T+1 settlement cycle has been fully implemented in India since January 2023. ✔️ This means shares or money get delivered on the very next working day after the trade. India is among the first major markets in the world to move to T+1 settlement — faster and better for investors! 🚀 🎨 Simple Example to Understand: Let’s say you bought 100 shares of a company on Wednesday. ✔️ In T+1 system — You will get the shares in your Demat account by Thursday. ✔️ If you sold shares on Wednesday — You will get the money by Thursday. But remember — weekends and holidays are not counted as working days. 📝 Why Settlement Cycle Matters? ✔️ You cannot sell shares unless they are in your Demat account (unless doing intraday trading). ✔️ You cannot use sale proceeds immediately unless settlement is complete. ✔️ Faster settlement gives investors quicker access to money or shares. ⚠️ Important Notes: ❌ Intraday trading does not follow this cycle because buying and selling happen on the same day — no actual delivery. ❌ T+1 Settlement is only for equity shares — not for commodities, currency, or F&O where different rules apply. 🏁 Final Thoughts: The Settlement Cycle may sound technical but it’s an important part of how the stock market works smoothly. Thanks to the T+1 system, investors in India now enjoy one of the fastest settlement systems globally, ensuring quick delivery of money and shares. Always remember this timing when planning your trades, especially if you need the money or shares urgently for the next transaction. 🌿 Stay Smart. Know the Rules. Invest Fearlessly. 🌿