7. What happens when you click Buy?
You press Buy on your app. One second later it says "Executed". It feels like magic. But behind that one second, many players work together. Let us follow one order from start to end.
7.1 The main players, once more
- You – the investor.
- Broker – checks your money and sends the order.
- Exchange – matches your order with a seller.
- Clearing corporation – makes sure both sides deliver. NSE’s is called NSE Clearing Ltd, and BSE’s is the Indian Clearing Corporation Ltd (ICCL).
- Depository – moves the shares from the seller’s demat to yours.
7.2 Trade vs settlement
These are two different things, and beginners mix them up all the time.
- Trade = the moment your buy order is matched with someone’s sell order. Price and quantity are now fixed.
- Settlement = the moment the shares and money actually change hands.
The day you trade is called T (trade day). In India, most stock trades settle on T+1 – the next working day. India moved fully to T+1 in January 2023, one of the fastest settlement cycles among big markets in the world. SEBI has also started an optional same-day (T+0) settlement for a limited set of stocks.
Priya buys 20 shares on Monday at 11 am.
- Monday (T): Order matched. Money is blocked/debited in her trading account. Contract note arrives in the evening.
- Tuesday (T+1): Shares are credited to her demat account. The seller gets the money.
If Priya sells shares on Monday, her money usually becomes available to withdraw after settlement on Tuesday.
7.3 Why the clearing corporation is a hero
Think about it. You do not know the seller. What if they do not deliver the shares? What if a buyer does not pay?
The clearing corporation solves this. It becomes the buyer to every seller and the seller to every buyer. It guarantees settlement. To make this possible, it collects margins (deposits) from brokers and keeps a guarantee fund. This is why you can trade with a stranger in another city without any fear.
Sometimes you buy a share and sell it the next day, before it reaches your demat. This is called BTST (Buy Today, Sell Tomorrow). It is allowed, but carries a small risk: if the person who sold to you fails to deliver, your sale can also face a problem. As a beginner, simply know the term.
7.4 Intraday vs delivery
- Delivery (CNC): You buy and keep the shares. They come to your demat. You can hold them for days or years.
- Intraday (MIS): You buy and sell on the same day. The shares never come to your demat. If you do not close the trade, the broker usually closes it automatically near the end of the day.
Intraday looks exciting – fast action, quick money. But most beginners lose money there. Learn to read daily charts and hold delivery trades first. Speed comes later. Pehle chalna seekho, phir daudna.
India follows T+1 settlement for most stock trades. Shares come to your demat on the next working day.
The clearing corporation stands between buyers and sellers and guarantees settlement.
Same-day buy and sell is intraday. The shares never reach your demat account.
- Your order goes: you → broker → exchange (match) → clearing corporation → depository → your demat.
- Trade day is T. Most Indian stock trades settle on T+1.
- The clearing corporation guarantees every trade.
- Delivery trades bring shares to your demat. Intraday trades are closed the same day.
- Ek line mein: Aaj kharido, kal demat mein – aur beech mein clearing corporation guarantee deta hai ki sab theek hoga.