September 29, 2023

Trading Holiday Vs Settlement Holiday

Vineet Rajani | Current Affairs

Today, 29 September 2023, is an unusual day in the financial markets. It is a trading day for all financial instruments but a settlement holiday for some. Quarter-end has added to the confusion. Why so?

The Government of Maharashtra moved the public holiday for Eid-e-Milad from 28th September to 29th September. So, the Clearing Corporation moved the settlement holiday for Equity and F&O as well. Note that trading will be allowed on both days. 

Let’s first break down the difference between a trading holiday and a settlement holiday. Then, we will identify the instruments that have a settlement holiday from those that don’t.

When you trade in a security, its settlement happens on the T+1 day. Meaning – 

  • When you buy a security, it is credited to your demat account on the next working day. 
  • When you sell a security, the funds are credited to your trading account to withdraw on the next working day.

A trading holiday is when you cannot buy or sell stocks. A settlement holiday is when regular trading persists, but the settlement of an Equity and/or F&O trade does not take place, i.e., stocks or funds due from/to you are not debited/credited to your respective accounts. 

Trading and settlement holidays may or may not coincide. Confusion arises when they do not coincide. In the current situation, we have settlement holidays on 29th September and 2nd Oct. We have a trading holiday only on 2nd October. 30th September and 1st Oct are a weekend.

What are the implications of this? The trades you place on 28th September and 29th September will all be settled on 3rd October. But hey, the financial quarter will change over the weekend. Executed but unsettled trades could be a reporting issue.

Therefore, the RBI has decided to keep settlement activities functional today. To sum it up, it is a settlement holiday for Equity and F&O transactions of September 28, but not for the Currency derivative segment. The RBI’s primary market operations of government securities, money market securities, and rupee interest rate derivatives are also open for settlement.

As an investor/trader, you must be abreast of the settlement dates to ensure your strategy plays out. You do not want to plan a stock sale before it is credited to your account. You also do not want to plan a purchase before you have funds.


11 comments

View all comments →
  1. Niresh Ranjan says:

    Well explained!

  2. Vineet Rajani says:

    Thank you. 🙂

  3. Arjun says:

    Will the profit settled on the next day or after the holiday over…

    • Vineet Rajani says:

      Hi Arjun, if the next day is a holiday, settlement will happen on the working day immediately after the holiday. 🙂

  4. Naga says:

    Hi,

    Why the orders are rejecting in Coin with a reason of “UNRID-Transaction is Cancelled As There is No Matching Sell Transaction”.
    as a trader if we placed the buy/Sell order in coin app. if it is a settlement holiday. then the order suppose to execute and settle on the next working day. instead of this if the order is rejected. who will bear the cost of time difference effected NAV its not fair.

  5. Devendrakumar Pakhal says:

    My accounts are not matching between my total amount on weekends, sale of shares and purchase of shares, fluctuations in market on Monday and remaining balances are not matching, hence I need clarification please.
    Thank you

View all comments →
Post a comment