Settlement Cycles by Security Type

What this video covers

• The difference between trade date and settlement date, and why the gap between them is the settlement cycle
• Why T+1 (trade date plus one business day) is the federal standard for regular-way settlement and what the SEC rule prohibits
• How weekends and market holidays affect the settlement timeline, and why a Friday trade settles Monday
• Why U.S. government securities and municipal bonds are technically exempt from the federal T+1 requirement but still settle T+1 by market convention
• What a cash trade is, why it settles T+0 (same day), and why it is the only cycle shorter than standard T+1
• The three conditions for T+2 settlement: firm commitment offering, priced after 4:30 PM Eastern time, and why this is the only standard cycle longer than T+1
• How the test writers use wording traps (capital-C capital-T Cash Trade versus ordinary cash) to make you pick the wrong settlement date