How Securities are Traded?

Section: 7 Trading on Exchanges

Sub Section: 7 Settlement

In most stock exchanges of developed economies, an order executed on the exchange must be settled within three working days. This requirement is often referred to as the T + 3 system of settlement i.e. trade plus three working days. The purchaser must deliver the cash to his broker, and the seller must deliver the stock to the broker, who in turn delivers it to the buyer's broker. In some exchanges, settlements are made through T + 5 or T + 7 system.

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