Settlement date

Settlement date

The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade. For mutual funds, settlement usually occurs in the US the day following the trade. In some regional markets, foreign shares may require months to settle.

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settlement date

The date on which either cash (for a buyer) or a security (for a seller) must be in the hands of the broker in order to satisfy the conditions of a security transaction. Compare trade date. See also delayed settlement.

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Settlement Date

1. The date upon which the buyer of a security must pay the seller. The settlement date depends upon the type of security traded; for example, stocks usually have a settlement date three days after the trade date. On the other hand, government bonds must be settled on the next trading day. It is important to note that when calculating the capital gains or losses, one uses the trade date and not the settlement date.

2. In life insurance, the day the benefit is paid. This usually follows the death of the beneficiary, unless he/she cashes in the policy.

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Settlement date. The settlement date is the date by which a securities transaction must be finalized.

By that date, the buyer must pay for the securities purchased in the transaction, and the seller must deliver those securities.

For stocks, the settlement date is three business days after the trade date, or what's referred to as T+3. For options and government securities, the settlement date is one day, or T+1, after the trade date.

In figuring long- and short-term capital gains on your tax return, you use the trade date -- the date you buy or sell a security -- rather than the settlement date as the date of record.