One-hour trade settlement

About one-hour trade settlement:

• In a one-hour settlement, if an investor sells a share, the money will be credited to their account in an hour, and the buyer will get the shares in their demat account within an hour.
• What is trade settlement?
  • Settlement is a two-way process which involves the transfer of funds and securities on the settlement date.
  • A trade settlement is said to be complete once purchased securities of a listed company are delivered to the buyer and the seller gets the money.
  • The current cycle of T+1 means trade-related settlements happen within a day, or 24 hours of the actual transactions.
• The migration to the T+1 cycle came into effect in January 2023.
• India became the second country in the world to start the T+1 settlement cycle in top-listed securities after China.

What is a Demat Account?

• A Demat Account or Dematerialised Account provides the facility of holding shares and securities in an electronic format.
• During online trading, shares are bought and held in a Demat Account, thus, facilitating easy trade for the users.
• It holds all the investments an individual makes in shares, government securities, exchange-traded funds, bonds and mutual funds in one place.

Q1) What are Exchange-Traded Funds?

Exchange-Traded Funds (ETFs) are investment funds and exchange-traded products that are designed to track the performance of a particular index, commodity, bonds, or a basket of assets like stocks. ETFs are traded on stock exchanges, just like individual stocks, and they provide investors with a way to gain exposure to a diversified portfolio.

Source: What is one-hour trade settlement, which SEBI is planning to launch by March next year