A settlement holiday is a specific day when financial institutions, such as stock exchanges and banks, suspend the settlement process for financial transactions. During a settlement holiday, clearing and settlement of trades or payments are not processed, leading to a delay in the completion of transactions. The stock markets remain open on settlement holidays, but the depositories, such as NSDL and CDSL, are closed. Settlement holidays are also known as transfer holidays. The relevant regulatory authorities typically pre-determine and announce settlement holidays. Settlement holidays serve various purposes within the financial system, such as providing a break from routine financial activities.

In contrast, a trading holiday is a day when stock exchanges are closed, and no trading can take place. On a trading holiday, all primary and secondary market transactions are suspended, and investors cannot buy or sell stocks. Trading holidays and settlement holidays are two different things. The SEBI has declared these holidays to ensure that there is no market volatility due to any unusual situation that may occur on these days.

It is important for investors to be aware of these holidays and plan their investments accordingly. During a settlement holiday, no settlements occur, and stock deliveries are put on hold. If a holiday falls between the trade day and the settlement date, it can lead to delays in transferring share ownership. Investors cannot place orders on trading holid...