The delivery time of a stock typically follows a T+2 settlement cycle, which means the buyer receives the shares two days after the transaction date. This standard ensures a timely transfer of ownership in the financial markets.
Understanding the T+2 Settlement Cycle
The "T+2" in the settlement cycle refers to Trade Day + 2 days. Here's a breakdown:
- Trade Day (T): This is the day the stock transaction occurs (the day you buy or sell shares).
- +2 Days: This refers to two business days following the Trade Day. Weekends and public holidays are usually not counted as business days.
Therefore, if you buy a stock on a Monday (assuming it's a business day), you can expect the shares to be officially delivered to your brokerage account on Wednesday.
The table below illustrates how the T+2 settlement cycle works:
| Term | Description | Example (Transaction on Monday) |
|---|---|---|
| T (Trade Day) | The day the stock trade is executed. | Monday |
| +1 Day | The first business day after the trade. | Tuesday |
| +2 Day | The second business day after the trade (settlement). | Wednesday |
| T+2 | The date when the transaction is finalized, and the buyer receives the shares (or the seller receives funds). | Wednesday |
Delivery Trading and Holding Period
In the context of delivery trading, where an investor intends to hold the shares, the T+2 settlement cycle signifies when the shares are officially transferred to their demat account. It's important to note that delivery trading itself does not impose a requirement to sell the shares within a specific timeframe; investors can hold them for as long as they wish once delivered.
