South Florida Arbitration & Litigation Lawyer Blog
T + 3 – Settlement of Security Transactions – Boca Raton, Lake Worth and North Palm Beach, Florida Securities Litigation and Arbitration Attorney
What is meant by T+3?
Generally, investors must complete or settle their security transactions within three business days. This settlement cycle is known as “T+3,” shorthand for “trade date plus three days.”
T+3 means that when you buy a security, your payment must be received by your brokerage firm no later than three business days after the trade is executed. When you sell a security, you must deliver your securities, in certificated or electronic form, to your brokerage firm no later than three business days after the sale.
The three-day settlement date applies to most security transactions, including stocks, bonds, municipal securities, mutual funds traded through a brokerage firm, and limited partnerships that trade on an exchange. Government securities and stock options settle on the next business day following the trade.
Delivery on sales should be made by the settlement date. Under Rule 204, firms that clear and settle trades must deliver securities to a registered clearing agency for clearance and settlement on a long or short sale in any equity security by the settlement date or must take immediate action to close out failures to deliver by no later than the beginning of regular trading hours on T+4 (for short sales) or T+6 (for long sales and fails attributable to bona fide market making).
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