"So, Neha, is there a particular date or sample to this agreement date?" asks Rahul." Yes, the NSE used to have a weekly loop where trades settle every Tuesday; however, it has updated now," Neha says. Now, we have got a T+2 agreement cycle. Let me provide you with an example: So let's say you purchased 50 stocks on a particular day referred to as T, that is April 2. Your T+2 day is April 2+2, that is April 4. On April 4, you'll make the charge of the overall quantity of the cost of securities you purchased to the alternate. When you make the total payment, these stocks credit in your demat account through the alternative."

"That section is about purchasing shares," Neha continues. If you had sold shares, they have transfer out of your demat account and the selling proceeds added to your trading account until the T+2 day."

Rahul has another skepticism. "But, Neha, what happens trade is made on a Friday?" "It's that easy! Since Saturdays and Sundays are not working days in that situation, it will determine on Tuesday," she says.

"I recall learning of a concept known as a rolling settlement. Rahul wonders aloud, "What does that mean?"

"Normal settlement and rolling settlement are two words for the same matter. That's just what we discussed when I explained settling times in stock trades. It's the T+2 settlement I listed earlier. "Shares are exchanged solely for delivery in the trade-to-trade settlement."

"I have one more!" Rahul breaks the discussion. "What if a seller is unable to offer the shares by T+2?" "That's a great question, Rahul. When a trader cannot deliver shares, the exchange holds an auction to purchase the shares and deliver them to the buyer.

Settlement in the commodity market

"Fine, it was just about stock trades," Rahul says, pausing. "I understand you're concerned about what happens in the derivatives, currency, or asset markets?" Neha inquires. "In the commodities market, futures are settled on a mark-to-mark (MTM) basis every day," she continues. Final payment sums for options are either credited or debited on a T+1 basis." "As you must have guessed, T+1 is transaction date +1," Neha explains.

A recap of the settlement cycle

"I'll outline the procedure for you, Rahul, only because you have a good idea of what the settlement period entails," Neha says.

"Say you have a demat and trading account, and on April 2, you buy X number of shares of A firm. The exchange day, also known as T day in trading slang, is the day you make this deal. Your broker deducts some costs from the amount you purchased. On this day, you will also get a contract notice outlining the agreement you have made.

"The market receives the money on Day 2, also known as Trading Day +1 or T+1. The shares are transferred to your trading account and then to your demat account on Day 3, also known as Trade Day +2 or T+2, indicating that you are now the owner of the shares."

"You're welcome, Neha!" That gave me a clear idea of how the arbitration process worked," Rahul explains.

"Rahul, I believe you should be able to get more hands-on experience now that you have a demat and trading account. The best thing is that you can exchange from anywhere on your bright screen, thanks to a smooth GUI. You will have access to investment and trading tips, advisories, and analysis so you can make an educated decision. There's nothing like having your feet wet in the trading world to have a firsthand look at the arbitration process," Neha concludes. Rahul wholeheartedly agrees.