Standard Settlement Time Frames for Various Products
Chapters in this video
What this video covers
- How the SEC rule sets a maximum contract time frame, while the UPC determines the actual delivery date
- Why most covered transactions use T+1, how the second-business-day rule applies to qualifying cash sales priced after 4:30 p.m. Eastern Time, and why that is not a general two-day cycle
- How the UPC sets cash, regular-way, seller's-option, buyer's-option, and delayed-delivery dates at the purchaser's office, including early-delivery notice rules
- Why a fail to deliver does not cancel the contract, and how buy-in or selling-out rules address the failure unless both parties agree to cancel
- Why physical-delivery and cash-settled options generally settle on the first business day after exercise, when a capped automatic exercise takes two business days, and why the Options Clearing Corporation (OCC), not the exchange, sets the date
- How when-issued fallback branches work, why when-distributed contracts have only the notice branch, and how fixed versus contingent income is treated
- How mark-to-market demands are one-sided, when a failed demand permits closeout, and why issuer financial trouble alone does not cancel a when-issued contract
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