What is the difference between a trade date and a settlement date?
Similarly one may ask, what is trade 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).
Furthermore, what is a settlement day? Settlement date is a securities industry term describing the date on which a trade (bonds, equities, foreign exchange, commodities, etc.) settles. That is, the actual day on which transfer of cash or assets is completed and is usually a few days after the trade was done.
Likewise, what is the difference between value date and settlement date?
Due to differences in time zones and bank processing delays, the value date for spot trades in foreign currencies is usually set two days after a transaction is agreed on. The settlement date is the date on which a transaction is completed. The value date is usually, but not always, the settlement date.
Why does it take 3 days to settle a 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.