Stock Trade Settlement Process in India: As Investors, we play the role of both buyers and sellers within the stock exchange online stock market. We enjoys trading activities to either purchase or sell shares. Although the mechanism may look simple with only a couple of parties involved, there are variety of activities performed by various other groups behind the scenes. this is often to make sure trading activities happen smoothly with minimal risk.
In today’s article, we’ll check out the stock trade settlement process in India. Here, we aim at understanding the business cycle , Clearing, and Settlement process while trading in shares online stock market.
Process involved within the Transfer of Shares
The transfer of shares includes three processes.
1. Execution
Execution is when the order to buy/sell is completed by the customer and therefore the seller online stock market. An execution is claimed to be completed only it’s filled. this is often after the trader places an order and supported the instructions of the order the broker fulfills the wants of the order within the stock exchange . Only then the order is claimed to be filled.
2. Clearance
After the trade is executed the clearing process begins. In clearing process, it’s identified what proportion money is owed to the vendor and the way many shares are owed to the customer online stock market. aside from identification trade recording, confirmation, determination of the requirement of various parties and risk assessment also happen . This process is managed by a 3rd party referred to as a financial institution . Clearing Activities happen on T+1 day.
3. Settlement
The stage involves the particular exchange of shares and money online stock market. Here the shares are moved to the buyer’s DEMAT Account and therefore the money is transferred to the sellers trading account. These activities happen on T+2 days.
