Settlement date

• The date on which trade is cleared by delivery of securities against funds. The settlement data may be the trade date or a later date.

• For stocks, payment must be made by the third business day after the purchase. This is the Settlement Date.

• Is the date of the financial satisfaction of a transaction. This satisfaction can include payment and delivery of securities. In recent years, there has been progress towards closing the gap between trade date and settlement date. Many back office systems are primarily focused on settlements whereas front office systems are primarily focused on trades or transactions. Here, too the gaps are narrowing with the implementation of middle office software.

• The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently 3 business days after the trade. For mutual funds, settlement usually occurs in the U.S.the day following the trade. In some regional markets, foreign shares may require months to settle.


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