If you've ever wondered why your bought shares don't appear in your Demat account immediately, or why your sale proceeds take a day or two to arrive, the answer lies in NEPSE's settlement cycle. There's a lot of conflicting information online about whether Nepal follows T+1 or T+2 settlement. This post clears up the confusion using CDSC's own official settlement procedure.
What Does T+2 Settlement Mean?
According to CDSC's official settlement procedure, Nepal's share market runs on a T+2 settlement cycle. "T" stands for the trade date — the day you place a buy or sell order that gets executed on NEPSE. The "+2" means final settlement — where shares actually land in the buyer's Demat account and funds reach the seller's bank account — is completed two business days later.
Breaking Down the T+2 Timeline
- T (Trade Day): Your buy or sell order is matched and executed on NEPSE. The trade file is loaded into CDSC's clearing system.
- T to T+1: Base price entry for capital gains tax (CGT) purposes takes place. This is also when sellers must complete WACC calculation and EDIS confirmation, typically by 9 PM on T+1.
- T+2: Final settlement day — funds and securities are exchanged. CGT is calculated, closeout/shortage cases are identified, and both shares and funds are paid out to the respective parties.
Why Do Some Sources Say T+1?
Part of the confusion comes from the fact that T+1 is an important intermediate deadline within the broader T+2 cycle — it's the day sellers must complete WACC and EDIS to avoid the 20% closeout penalty. Because this deadline is so critical for investors, some articles refer to it loosely as "the settlement day," even though final settlement technically completes on T+2. If you missed our post on this, check out: What Is a Closeout in NEPSE? How to Avoid the 20% Penalty.
What This Means for Buyers and Sellers
- Buyers: Shares purchased today won't be available to resell until T+2, when they're officially credited to your Demat account. Attempting to sell before that is considered a short-sell violation.
- Sellers: You must complete WACC and EDIS by T+1, 9 PM, or risk a 20% closeout penalty. Sale proceeds are credited to your bank account around T+2, sometimes with a short additional delay depending on your broker and bank.
- Dividend/Bonus eligibility: Since settlement takes two days, you must buy shares at least two trading days before a company's book closure date to be eligible for dividends or bonus shares.
Is Nepal Moving to T+1 Settlement?
Globally, major markets like the United States and India have already shifted to a faster T+1 settlement cycle to improve liquidity and reduce counterparty risk. Nepal, however, currently still operates on T+2 as confirmed by CDSC's official procedure. While some industry commentary suggests NEPSE may explore faster settlement in future system upgrades, there has been no official confirmation of a move to T+1 as of now. We'll update this post if that changes.
Frequently Asked Questions (FAQ)
How long does it take to receive money after selling shares?
Under the T+2 cycle, funds are typically credited to your bank account around two business days after the trade, provided WACC and EDIS were completed on time.
Can I sell shares before they're settled?
No. Shares must complete the T+2 settlement cycle before you can resell them. Attempting to do so is treated as a short-sell violation.
Does a public holiday affect the settlement timeline?
Yes. Since T+1 and T+2 refer to business days, public holidays and weekends push the settlement dates further out.
Conclusion
Nepal's share market currently runs on a T+2 settlement cycle, with T+1 serving as the critical deadline for WACC and EDIS confirmation. Understanding this timeline helps you avoid closeout penalties, plan trades around book closure dates, and know exactly when to expect your shares or funds. Keep an eye on CDSC announcements, since global trends toward faster settlement could eventually bring changes to Nepal's market as well.
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