PSX settlement cycle explained

What "settlement" means

When you buy or sell shares on the Pakistan Stock Exchange (PSX), the trade is matched at once. The actual exchange of cash and shares happens later. That later step is settlement.

The settlement cycle is the gap between the trade date and the settlement date. It is written as "T plus" a number of business days, where T is the day the trade is executed. Weekends and market holidays do not count.

In Pakistan, trades are cleared through the national clearing company. Shares are held electronically and move through the Central Depository Company (CDC). For an introduction to how the exchange is organised, see PSX explained and PSX basics.

The current PSX settlement cycle: where to check

We do not state the number of settlement days on this page. We could not verify the current figure from an official source in a form we can quote. Exchanges change their settlement cycle from time to time, and an outdated figure can cause real problems with your cash.

To confirm the current cycle:

• Check notices and the rule book on the PSX website.
• Check announcements from the national clearing company and from CDC.
• Ask your broker. The broker must apply the official cycle and can tell you the exact settlement date of each trade.

In Pakistan, trading in listed securities is allowed only through brokers licensed by the Securities and Exchange Commission of Pakistan (SECP), with trading in listed securities and commodities only via SECP-licensed securities and futures brokers. Per the SECP, lists of licensed brokers are on the PSX and PMEX websites. Use only a broker from those lists.

Effect on your funds

When you buy:

• Your broker usually blocks or debits the purchase amount on the trade date.
• The shares reach your CDC account or sub-account on settlement. Until then, they are not fully yours to transfer.
• Some brokers ask for the full amount in advance, so check your broker's own deadline for payment.

When you sell:

• The sale proceeds are credited to your broker account on the settlement date, not on the trade date.
• You can request a withdrawal to your bank only after settlement. After that, the bank transfer adds its own processing time.
• Plan cash needs, such as fees or a purchase elsewhere, around the settlement date.

For how holdings are recorded, see CDC accounts.

Effect on dividends and corporate actions

A company pays a dividend to the shareholders on its register at the book closure or record date. Your purchase must have settled by then. Executing the trade by then is not enough.

As a result:

• Each dividend has a last day to buy shares and still receive it. That day falls earlier than the book closure by the length of the settlement cycle.
• If you buy after that day, the seller keeps the entitlement. The share usually trades "ex-dividend", and its price often adjusts on that day.
• The same logic applies to bonus shares and rights issues.

Company announcements on the PSX website give the book closure dates. Your broker can confirm the last eligible trade date. Dividend income has its own tax rules. See Capital gains tax and Payments, tax, Islamic banking.

Practical points for traders

• Selling shares bought today: Your broker's rules decide whether this is allowed before settlement. Ask before you trade.
• Holidays: A market holiday pushes the settlement date later. Check the PSX holiday calendar. See Hours and limits.
• Failed settlement: If you do not pay on time, your broker may close the position or charge a penalty under its own terms.
• Offshore platforms: Per the SECP, offshore platforms have no Pakistani licence or oversight and offer no legal protection or recourse. More on this in Law and regulators.

New to these terms? See the trading glossary. To get started on PSX, see Open trading account.

Frequent questions

What is the PSX settlement cycle?

It is the number of business days between the trade date and the date when cash and shares change hands. Confirm the current figure on the PSX website or with your broker.

Is PSX settlement T+2?

We do not quote a figure because we could not verify the current one from an official source. Check PSX notices or ask your licensed broker.

What does CDC settlement mean?

On the settlement date, the shares move electronically into or out of your account at the Central Depository Company.

When can I withdraw money after selling shares?

Only after the trade settles and the proceeds reach your broker account. Your bank transfer then takes its own time.

Do I get the dividend if I buy just before book closure?

Only if your purchase settles before the book closure. Ask your broker for the last eligible trade date for that dividend.