Buying and Selling Stocks Online: Understanding T+1 System in India
What Happens After You Buy or Sell Stocks
Buying and selling shares have become quite straightforward these days. With a few clicks, investors can buy and sell shares. However, it may seem that after they click buy or sell, the stocks appear or get debited as the case be. However, this isn’t the case on Indian stock exchanges. In India, stock settlements follow a T+1 system, indicating that the completion and finalisation of all stock transactions occur two business days after the trade day (T day). Here we explain what happens after stocks are bought.
Day 1 (T Day): On Day 1, you buy X number of shares of Y company. Your broker debits this amount and provides a detailed contract note. This day is also known as the Trade Day (T day).In case you sell the shares, securities are blocked in your demat account for pay-in and contract note is issued for the sell transaction
Day 2 (T+1): On T+1, pay-in of securities and funds are executed and pay-out of the same are received on the same day. On pay-out of securities and funds, the brokers (buy transaction) receives the shares in their CM Pool Accounts and the same is then credited to the investor’s demat accounts. Similarly, funds too are credited to the investors bank account by the broker (sell transaction).