In stock market trading, when you purchase or sell stocks, you enter into a trade. However, this trade is settled when the buyer receives the shares, and the seller gets the money. The money is debited from the buyer's trading account while the share sale value is added to the trading account of the seller.
Published on 13 January 2022
OPEN A FREE* DEMAT AND TRADING ACCOUNT
IN 15 MINS*
However, the trading settlement process is not that simple and involves different stakeholders and clearing authorities. As an investor, you do not have to get into the technical details of intraday trading and the consequent trading settlement process. There are professional intermediaries to complete the trading settlement process seamlessly. But it is crucial to understand the mechanics behind the stock market trading process;
Here is everything you should know about stock market trading and the trading settlement process:
What is Stock Market Trading, Clearing and Settlement?
Foremost, for intraday trading in the secondary market, you have to open a trading account online with a broker or sub-broker. Once your trading account is active, you can start your intraday trading. You can buy and sell securities as per your choice. Once your purchase or sale contract is completed, you receive a contract note specifying that the trade is settled.
Typically, there are three elements in the trading settlement process :
Trading: When you place a buy or sale order through your trading account online, the stock exchange uses an electronic order matching system to match the stock orders from different traders. A trade match happens when a buy price is less than or equal to the best available sale price. The quantity of shares also affects the buy and sell the match. For instance, if there is a buy and sale price match, but there is not enough quantity to match the buy order, the order is not fulfilled fully. Only the available stock units at the asking price are included in the transaction. The trading orders are collected by brokerage firms from investors through their trading accounts. These orders are passed to stock exchanges for execution. Also Read: How to trade with Zero Brokerage?
Clearing: When a buy and sale price match, a trade is executed and results in a clearing. The clearing is the process whereby the security that is to be issued to the buyer is identified, and the due sum of the seller is ascertained. This clearing process is managed by independent bodies known as clearinghouses.
Settlement: In the last step, the financial obligations as set out in the clearing process are fulfilled. The trade is settled when the former receives the securities and the latter receives the payment. The official deal is done on the transaction date (T), but the settlement date is when the security ownership and money are transferred, generally T+2.
What are the Different Types of Trading Settlement Processes?
About intraday trading meaning, there are two types of stock market trading settlement process :
Spot settlement: This means the trading settlement process is done immediately according to the rolling settlement principle of T+2. As per the Rolling settlement principle, intraday trading settlement happens within T+2 days. The trade is closed after the second working day. Non-working days include Saturdays, Sundays, bank or national holidays and exchange holidays. For instance, if you buy some shares on a Friday, you will pay the transaction cost to the broker, but these shares will reflect in your trading account online on Tuesday. Your ownership for shares will begin from the day of trade settlement.
Forward settlement: In this type of trading settlement process , the buyer or seller agree to settle the trade at a later date in the future, which could be T+5 or T+7.
Important Aspects to Know About the Trading Settlement Process
All stock trading online is settled within T+2 days in the Bombay Stock Exchange (BSE)
The stock market trading settlement process is the same for equity, bonds, government securities and other fixed-income securities.
The payment to the broker (intermediary) is made on the same day of the trade.
The rolling equity trading settlement process for NSE (National Stock Exchange) is slightly different from BSE.
Conclusion
Overall, the trading settlement process is a complex process that involves various participants, including clearing corporations, clearing members, custodians, clearing banks, depositories, and professional clearing members. Understanding the stock market trading concept can help you better plan your intraday trading activities. Also Read: What is an Indian Depository Receipt?
Team Espresso
We care that you succeed
Bringing readers the latest happenings from the world of Trading and Investments specifically and Finance in general.
The stock market is volatile, especially if you are involved in intraday trading. However, it is the volatility of the stock market that makes it so lucrative for investors. Sudden peaks can result in significant profits, provided you follow intelligent and effective intraday trading strategies.
Intraday trading involves more risk compared to the regular stock market. Thus, if you want to avoid making losses, you must understand the basics of the concept. Traders must only invest the amount they are comfortable in losing to avoid financial disasters.
Also known as day trading, intraday trading refers to the purchase and sale of stocks and other financial instruments within the same day. There's no change in the ownership of shares due to these trades once all the positions are squared-off before the market shuts.
The stock market is volatile, especially if you are involved in intraday trading. However, it is the volatility of the stock market that makes it so lucrative for investors. Sudden peaks can result in significant profits, provided you follow intelligent and effective intraday trading strategies.
Intraday trading involves more risk compared to the regular stock market. Thus, if you want to avoid making losses, you must understand the basics of the concept. Traders must only invest the amount they are comfortable in losing to avoid financial disasters.
Also known as day trading, intraday trading refers to the purchase and sale of stocks and other financial instruments within the same day. There's no change in the ownership of shares due to these trades once all the positions are squared-off before the market shuts.
Sharekhan Comtrade Private Limited (TM) operates the web site accessible from the URL www.myespresso.com (the “web site”').
Sharekhan Comtrade Private Limited is committed to protecting your privacy and utilising technology that gives you the most powerful, safe, online experience that you can get anywhere else.
Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.Sharekhan Comtrade Private Limited does, however, gather certain information that is provided by you to the Web Site. Sharekhan Comtrade Private Limited believes that by collecting this information Sharekhan Comtrade Private Limited is able to provide you with a personalised web experience, and to assist its own sales team and advertisers in efficiently reaching an appropriate audience.
Sharekhan Comtrade Private Limited requests the minimum information it believes necessary to achieve this goal.
The following discloses Sharekhan Comtrade Private Limited's information gathering and dissemination practices for the Web Site:
System Data:
Sharekhan Comtrade Private Limited uses your IP address to help diagnose problems with our server and to administer the web site. Your IP address is used to identify you and your shopping cart and to gather broad demographic information.
Registration Data:
The Web Site's registration form may require users to give us contact information (like their name, phone number and e-mail address), unique identifiers (like their PAN Number) and demographic information (like their pin code, age or income level). The Web Site uses customer contact information from the registration form to send the users information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Comtrade Private Limited's partners. The customer's contact information is also used to contact the visitor when necessary. Unique identifiers (such as PAN numbers) are collected to verify the user's identity. Demographic and profile data is also collected at the Web Site. We use this data to tailor the visitor's experience at the Web Site, showing them contents that we think they might be interested in, and displaying the contents according to their preferences. This information is shared with advertisers on an aggregate basis.
Links and Co-Branded Sites:
This site contains links to other Web Sites which are not necessarily been screened or reviewed by www.myespresso.com. Sharekhan Comtrade Private Limited is neither responsible for the privacy practices or the contents of such Web Sites nor shall be held answerable for the inaccurate, inappropriate or offensive data, material, information, products and services that may be viewed on those sites.
Sharekhan Comtrade Private Limited may operate a number of co-branded sites. Policies regarding information collection and sharing may differ on some of these co-branded sites. If you have any particular questions, you should check the privacy statement that appears on each co-branded site.
Order Forms:
The Web Site uses an order form for customers to request information, products and services. The Web Site collects visitors' contact information (like their mobile number or e-mail address), unique identifiers (like their PAN number) financial information (like their account or credit card numbers) and demographic information (like their pin code, age or income level). Contact information from the order form is used to send orders, information about Sharekhan Comtrade Private Limited, and promotional material from some of Sharekhan Comtrade Private Limited's partners to the visitors of the Web Site. The visitor's contact information is also used to get in touch with the visitor when necessary. Financial information that is collected is used to check the users' qualifications and bill the user for products and services. Unique identifiers (such as PAN numbers) are collected from Web Site visitors to verify the user's identity.
Surveys and Contests:
The Web Site's online surveys ask visitors for contact information (like their mobile number or e-mail address) and demographic information (like their pin code, gender, age or income level). The Web Site uses contact data from its surveys to send the user information about Sharekhan Comtrade Private Limited and promotional material from some of Sharekhan Ltd.'s partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below. Demographic and profile data is also collected at the Web Site. The Web Site use this data to tailor its visitor's experience at the Web Site, showing them content that it thinks they might be interested in, and displaying the content according to their preferences. This information is shared with advertisers on an aggregate basis.
Sharekhan Comtrade Private Ltd run contests on the Web Site in which we ask visitors for contact information (like their e-mail address). Sharekhan Comtrade Private Limited uses contact data from its contests to send users information about Sharekhan Comtrade Private Ltd. and promotional material from some of our partners. The customer's contact information is also used to contact the visitor when necessary. Users may opt-out of receiving future mailings; see the choice/opt-out section below.
Third-Party Advertisement Servers:
Sharekhan Comtrade Private Limited engages the services of an outside advertisement company to display advertisement on the Web Site. These advertisements may contain cookies. While Sharekhan Comtrade Private Limited uses cookies in other parts of the Web Site, cookies received with banner advertisements are collected by the Advertisement company, and Sharekhan Comtrade Private Limited does not have access to this information.
Protection of your Data and Information:
The privacy and protection of your data and information provided to us is of vital importance. Sharekhan Comtrade Private Limited shall ensure to safeguard the security and confidentiality of any information you share with us. Any personally identifiable information of the customers obtained by us shall not be used or shared other than for the purposes to which the customers consents. However security and confidentiality of information cannot be guaranteed cent percent. Hence despite our utmost efforts to protect your personal information, Sharekhan Comtrade Private Limited and www.myespresso.com cannot warrant the security of any information you transmit to us through our online services. Such transmission of your personal information is done at your own risk.
Disclosure of Customer Information :
Sharekhan Comtrade Private Limited and www.myespresso.com shall not deliberately disclose customer's personally identifiable information to any unauthorized third person, save and except where such information shall be disclosed in good faith and for the purpose of law for the time being in force or to protect the rights and property of Sharekhan Comtrade Private Limited and www.myespresso.com.
Public Forums :
The Web Sites makes chat rooms, forums, message boards and/or news groups available to its users. Please remember that any information that is disclosed in these areas becomes public information and you should exercise caution when deciding to disclose your personal information.
Supplemental Information :
The Web Site supplements the information that you provide with information that is received from third parties.
The Web Site DOES NOT entice by the prospect of a special game, prize or other activity, to divulge more information than is needed to participate in the activity.
Further to the above, in light of the recently notified Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (Hereinafter referred to as the Rules)
The following shall be deemed to be sensitive information :
Password;
Financial information such as Bank account or credit card or debit card or other payment instrument details;
Physical, physiological and mental health condition;
Sexual orientation;
Medical records and history;
Biometric information;
Any detail relating to the above clauses as provided to body corporate for providing service; and
Any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of Rules.
Collection of Information:
Compliance with KYC guidelines as per SEBI / Exchanges / Or any other Act, law or regulation requiring the same and any internal KYC guidelines formulated by Sharekhan Comtrade Private Limited.
In order to provide enhanced trading experience to the client.
In order to provide any further information to be provided to regulators.
Such information may be collected in a manner that the client is always aware of the collection and purported usage of the same. The client shall have an option to withdraw consent to share the information. However such intimation shall be required in writing. Such intimation shall only be taken into account from the date on which the same is received. Sharekhan Comtrade Private Limited may choose to stop services to such a client in case such intimation is received. Such information shall only be used for the purpose it is collected.
Clients would be allowed an option not to disclose any information to be collected, provided the same is in compliance with regulatory requirements.
Disclosure of information:
Disclosure of sensitive information would be as per the terms agreed by the clients. For any change in such terms, the clients would be informed.
Provided no consent may be required in case the same is being shared as per compliance guidelines or as required by regulators.
Any information being disclosed to third parties would be in accordance with the Rules and would be done provided such third party has the same level of compliance guidelines as Sharekhan Comtrade Private Limited.
Sharekhan Comtrade Private Limited shall allow clients to review their personal information and the same shall be allowed to be edited provided exchange guidelines relevant to the same are followed.
Sharekhan Comtrade Private Limited shall maintain reasonable security practices and procedures and maintain a comprehensive documented information security programme. In the event of an information security breach, Sharekhan Comtrade Private Limited or a person on its behalf shall be required to demonstrate as and when called upon to do so by the agency mandated under the law, that there have implemented security control measures as per their documented information security programme and information security policies and information security policies that contain managerial, technical, operational and physical security control measures that are commensurate with the information assets being protected with the nature of business.
KYC Languages
Download Client Registration Documents (Rights & Obligations, Risk Disclosure Document, Do's & Don't's) in Vernacular Language :
Note: "This document is a translated version of the client registration documents in English and is being provided in vernacular language to facilitate better understanding by the investors. In case of any ambiguity, the contents of the English version would prevail."
NDNCR Terms & Conditions
By accepting the Terms & Conditions, you authorise Espresso, its representatives and agents to provide information about various products, offers and services provided by Espresso through any mode, including telephone calls, SMSes, emails, letters and any other mode of communication. You also confirm that laws in relation to unsolicited communication referred in "National Do Not Call Registry" as laid down by "Telecom Regulatory Authority of India" will not be applicable for such information/communication.
Filing Complaints on SEBI Complaint Redress System (SCORES) - Easy and Quick
Register on the SCORES portal
Mandatory details for filing complaints on SCORES:
Name
PAN
Address
Mobile Number
Email ID
Benefits:
Effective communication
Speedy redressal of grievances
You can file complaints on SCORES through https://scores.gov.in/scores/Welcome.html