Settlement Time Frames
Chapters in this video
- 0:00 Trade date vs settlement date: the handshake and the cage
- 1:28 T+1: the SEC, OCC, and MSRB rules behind the standard
- 2:48 Friday to Monday: counting business days correctly
- 4:05 Regular way vs cash settlement and the special agreement trap
- 5:00 When legal ownership actually transfers
- 5:47 T-bill auction exception to T+1
- 6:16 Rapid-fire exam recap
What this video covers
- Why the standard settlement cycle is T+1 (trade date plus one business day) for stocks, corporate bonds, municipal bonds, government securities, options, and mutual funds
- How the Securities and Exchange Commission (SEC), Options Clearing Corporation (OCC), and Municipal Securities Rulemaking Board (MSRB) each enforce T+1 through different rules and conventions
- Why T+2 is a common exam distractor and how to spot it immediately as the wrong answer for standard settlement
- The difference between regular way settlement (automatic T+1 default) and cash settlement (same-day T+0), and why cash settlement requires a special agreement rather than being standard
- How to count business days correctly, excluding weekends and exchange holidays, to land on the precise settlement date
- Why legal ownership transfers on the settlement date rather than the trade date, and what that means for dividends, interest, and voting rights
- The T-bill exception: why new-issue Treasury bills settle on their issue date (typically 2-4 business days after auction) instead of T+1
Read the full lesson, free
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