Settlement Cycles by Security Type
Chapters in this video
- 0:00 The foundation: trade date versus settlement date
- 0:52 The Almighty T+1: federal regular-way standard
- 2:29 Cash trades at T+0 and the seller's option trap
- 4:18 Firm commitment offerings and the 4:30 PM ET cutoff
- 5:33 The exemption illusion: government and municipal securities
- 6:26 Rapid-fire exam recap
What this video covers
- Why T+1 is the regular-way settlement default and which securities fall under this umbrella
- How cash trades operate at T+0 and why both parties must expressly agree to same-day settlement
- The critical distinction between a cash trade and a seller's option trade on timing and party consent
- Why firm commitment offerings priced after 4:30 PM ET settle T+2 and which transactions qualify for this narrow exception
- Why U.S. government securities and municipal securities are technically exempt from the federal T+1 rule but still settle T+1 by market convention
- How to count business days correctly by excluding weekends and market holidays from the settlement timeline
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