Settlements - Know More About Stock Markets
In a Rolling Settlement trades executed during the day are settled based on the net obligations for the day. In NSE, the trades pertaining to the rolling settlement are settled on a T+2 day basis where T stands for the trade day. Hence trades executed on a Monday are typically settled on the following Wednesday (considering 2 working days from the trade day). The funds and securities pay-in and pay-out are carried out on T+2 day.
A settlement cycle is a period from the day the shares are bought/sold till the obligation of each client is settled by the exchange on T+ 2 day, where T indicates the trading/transaction day.
Settlement number is a specified number given by the exchange for the trades settled on a particular day. For example, Settlement no: 2004077 on April 28, 2004
Settlement date is a specified date on which pay-in and pay-out of securities/funds are settled.
In Pay-in of securities all the shares' obligations are picked up from the client's beneficiary account and transferred to HSBC InvestDirect Securities (India) Limited (HISL) pool account. All the shares are then delivered to the clearing corporation as per obligation with Exchanges.
In Pay-in of funds , the funds are transferred from a client's bank account to HISL bank account. All the funds are then transferred to the clearing corporation as per obligation.
In Pay-out of securities, shares are received from the Clearing corporation and the same is transferred to HISL pool account. All the shares are then transferred to the client beneficiary account.
In Pay-out of funds, funds are transferred from the Clearing corporation to HISL Bank a/c. All the funds are then transferred to the client bank a/c.
The exchange can initiate an auction in case the selling trading member is unable to deliver the shares, for various reasons such as short delivery, bad delivery and objections. The exchange purchases the requisite quantity in the auction market and gives the delivery to the buying trading member. This process takes three to five days to complete and thus in case if you have a purchase position and the shares are not delivered by the opposite selling member, then there could be a delay in receiving the shares, until such time that the exchange completes the auction process.
In internal shortage the broker repurchases securities from the exchange at market rate and the shares are transferred to the client's account. This cycle is completed in T+3 days.
Here there is a shortage in the exchange for which the client gets credit and the account is settled by the exchange. This cycle is completed in T+ 5 days.
The Settlement department carries out the pay-in and pay-out confirmation process of securities on a settlement basis. The purpose of this process is to transfer the securities to and fro, from the Client Beneficiary account to NSE/BSE via the broker's (HISL) pool account.