SIE Ready⚡ Trading & Settlement · Lesson 3 of 6 · 5 min
T+1: When the Cash and Shares Change Hands
⏱️ Since May 28, 2024, most US securities trades settle one business day after the trade. Count business days, not calendar days.
💡 Key idea
Regular way = T+1 business day for stocks, bonds, munis, governments and options; cash = same day.
🧠 Why it matters
SETTLEMENT is when the buyer pays and becomes the owner. REGULAR-WAY settlement is T+1, one business day after the trade date, under SEC Rule 15c6-1 as amended (compliance date May 28, 2024). T+1 covers stocks, corporate and municipal bonds, ETFs, US government securities and options. CASH settlement is same-day: the trade settles on the trade date. WHEN-ISSUED trades happen before the securities exist, so they settle once the securities are issued, on a date set at that time. GOOD DELIVERY means the securities are in acceptable form (properly endorsed or transferred, in the right amount). Example: buy stock regular way on Thursday; it settles Friday. Buy on Friday; it settles Monday, assuming no holiday.
📈 In the real world
📅 Priya, a fictional customer, sells shares regular way on a Friday before a Monday market holiday. She expects her cash Saturday. Her rep explains settlement counts business days: Monday is a holiday, so the trade settles Tuesday.
📌 Takeaways
- Regular way is T+1 since May 28, 2024
- Cash settlement means same-day settlement
- Count business days and skip weekends and holidays
📖 Terms in this lesson
Regular-way settlement: Standard settlement one business day after trade date (T+1) for stocks, corporate and municipal bonds, effective since May 28, 2024.
Cash settlement: Settlement on the trade date itself.
When-issued trade: A trade in a security that has been authorized but not yet issued, settling once it is.
✅ Test yourself
A regular-way stock purchase is made on a Wednesday with no holidays that week. When does it settle?
- Wednesday
- Friday
- Thursday
- Monday
Answer: C · Thursday
Regular-way settlement is T+1: one business day after Wednesday is Thursday. Same-day settlement is a cash trade, and T+2 (Friday) was the old standard before May 28, 2024.
Which describes a cash-settlement trade?
- It settles on the trade date
- It settles on the issue date
- It settles in two business days
- It settles next business day
Answer: A · It settles on the trade date
Cash settlement means delivery and payment on the trade date itself. Next business day is regular way (T+1), and settling at issuance describes when-issued trades.
Which security does NOT settle regular way on T+1 today?
- A municipal bond
- A Treasury note
- A when-issued new bond
- A listed common stock
Answer: C · A when-issued new bond
A when-issued trade happens before the security exists, so it settles once the security is issued. Listed stock, munis and Treasuries all settle T+1 regular way.
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