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Transaction in which a contract is settled on the same day as the trade date, or the next day if the trade occurs after p.m. EST and the parties agree to this procedure. Often occurs because a party is strapped for cash and cannot wait until the regular three-business day settlement. See: Settlement date.

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).

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.

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.

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).

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). For example, if you were to execute an order on Monday, it would typically settle on Wednesday.

If you purchase a security, the settlement date is the day you must pay for your purchase. If you sell a security, it is the date you will receive money for the sale.