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Most stocks and bonds settle within two business days after the transaction date. This two-day window is called the T+2. Government bills, bonds, and options settle the next business day.

A transaction date represents the date on which a transaction occurs whereas the settlement date is the day on which the transaction is finalised, that is, the ownership of the security is transferred to the buyer.

Only cash or the sales proceeds of fully paid for securities qualify as "settled funds." Liquidating a position before it was ever paid for with settled funds is considered a "good faith violation" because no good faith effort was made to deposit additional cash into the account prior to settlement date.

The settlement date is the date a buyer purchases a coupon, such as a bond. The maturity date is the date when a coupon expires. For example, suppose a 30-year bond is issued on January 1, 2008, and is purchased by a buyer six months later.

What Is a Settlement Date? The settlement date is the date when a trade is final, and the buyer must make payment to the seller while the seller delivers the assets to the buyer. The settlement date for stocks and bonds is usually two business days after the execution date (T+2).

The first is the trade date, which marks the day an investor places the buy order in the market or on an exchange. The second is the settlement date, which marks the date and time the legal transfer of shares is actually executed between the buyer and seller.

Most security transactions, including stocks, bonds, municipal securities, mutual funds traded through a broker, and limited partnerships that trade on an exchange, must settle in three days. Government securities and stock options settle on the next business day following the trade.

The settlement date is the date on which a trade is deemed settled when the seller transfers ownership of a financial asset to the buyer against payment by the buyer to the seller. The settlement date for securities ranges from one day to three days, depending on the type of security.

When does settlement occur? For most stock trades, settlement occurs two business days after the day the order executes, or T+2 (trade date plus two days).

The trade date is the date on which a transaction was executed. The settlement date is the date on which a transaction is completed. The value date is usually, but not always, the settlement date.