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The 'settlement period' is the amount of time between the exchange of contracts and the property settlement.
Settlement PeriodBrief History Originally, the settlement period gave both buyer and seller the time to do what was necessary which used to mean hand-delivering stock certificates or money to the respective broker to fulfill their part of the trade.
When you buy stocks, the brokerage firm must receive your payment no later than three business days after the trade is executed. In practice, the three-day settlement rule is most important to investors who hold stocks in certificate form, and would have to physically produce their shares in the event of a sale.
The 'settlement period' is the amount of time between the exchange of contracts and the property settlement.
For most stock trades, settlement occurs two business days after the day the order executes. Another way to remember this is through the abbreviation T+2, or trade date plus two days. For example, if you were to execute an order on Monday, it would typically settle on Wednesday.
It represents the day that the buyer must pay for the securities delivered by the seller. It also affects shareholder voting rights, payouts of dividends and margin calls. It is the date that the transaction associated with a trade can be considered final.
Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against (in simultaneous exchange for) payment of money, to fulfill contractual obligations, such as those arising under securities trades.
A settlement bank refers to a customer's bank where payments or transactions finally settle and clear for customer use. Often times, the (payer) of a transaction will be a customer of a different bank from the receiver, and so an interbank settlement process must occur.
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