From order to settlement

An order is a set of instructions. A trade is a match. Settlement is the later moment when shares and money actually move. This chapter follows one delivery purchase from the click to the demat credit, and shows where people confuse the three.

What you send to the market

A market order says: trade now, at whatever price the book currently offers, up to my quantity. A limit order says: trade only at this price or better. A stop-loss order says: if the price reaches this trigger, send an order. Each of these can be for the day or, on some segments, longer. The exchange’s own order types are the authority; an app may rename them.

A limit order can save you from a sudden gap and can also leave you unfilled. That is not a malfunction. You asked not to pay more than your price. A market order in a thin stock can fill far from the last traded price, because the next shares on offer sit much higher or much lower. Look at the depth, not only the last price, before you send a market order in anything that does not trade continuously.

The match is not the end

When your buy matches a sell, you have a trade. In the Indian equity cash segment, delivery settles on a T+1 cycle: the trade day plus one settlement day, subject to holidays and to whatever circular is in force if the cycle changes. On the settlement day the clearing corporation instructs the movement of shares into your demat account and the movement of funds out of the paying bank. Until that credit appears, you do not yet hold the shares, even though the app already shows a position.

This is why ‘sold the same day’ is a different contract. An intraday square-off never goes through delivery. You settle the price difference. You do not become a shareholder, you do not qualify for a dividend as an owner, and the tax label is not the label used for delivery holdings. The app may show both in one portfolio view. The law does not.

A Tuesday purchase, written as a diary

Tuesday, 10:15. You place a limit buy for 40 shares at ₹250. The best offer is ₹250.20, so nothing happens. At 11:02 a seller hits ₹250 and you are filled for 40. The app shows the position immediately. Your demat account does not.

Tuesday evening. The contract note arrives. Quantity 40, price ₹250, gross ₹10,000, then brokerage and statutory charges. You check it against the fill. This is the document you will want in a dispute, and the document your tax records will lean on.

Wednesday. Settlement runs. Funds leave. Shares are credited to the demat account. A depository alert confirms the credit. Only now is the delivery complete. If Wednesday is a settlement holiday, the credit moves to the next settlement day. ‘T+1’ counts settlement days, not your hope that Wednesday is convenient.

Auctions, short delivery, and why your credit can be late

If the seller’s broker cannot deliver shares, the clearing corporation runs a process, often an auction, to buy them in and deliver them to you, and the failing seller bears the cost under the rules. You may receive the shares a day later, or a cash close-out if the shares cannot be bought. You should not need to chase this yourself, but you should notice a missing demat credit. An alert that does not arrive is information.

Corporate actions interact with this calendar. If you buy just before a stock goes ex-dividend, settlement and the record date decide whether the dividend is yours. ‘I saw the announcement’ is not the test. The test is whether you were the holder the rules require on the relevant date.

What to remember

• Order, trade, and settlement are three events. The app shows the trade before the shares arrive.
• A limit order protects the price and can remain unfilled. A market order protects the fill and can worsen the price.
• Indian equity delivery currently follows a T+1 settlement cycle. Holidays shift the credit. Confirm the circular if you are unsure the cycle is unchanged.
• Same-day square-off is not delivery and does not make you a shareholder.
• Read the contract note the evening of the trade, and the demat alert on settlement day.