Question

Regulatory way trades of corporate bonds/stocks settle:

A) T+1.
B) T+2.
C) T+3.
D) T+4.

Answer 1

Trades of corporate bonds and stocks in the U.S. generally settle on T+2, meaning the trade is settled two business days after the trade date.

Step-by-step explanation:

The question inquires about the regulatory settlement time frame for trades of corporate bonds and stocks. Securities transactions in the United States, including stocks and most corporate bonds, generally settle on T+2, which means they are settled two business days after the trade is executed. This settlement cycle has been standardized to reduce market risk and improve efficiency.

In more detail, 'T' refers to the transaction date, and the '+2' signifies the number of business days after the transaction when the exchange of securities between buyer and seller must be complete. In the past, such as prior to September 2017, the settlement period was T+3, but this was updated to T+2 to reflect advancements in technology and improved trading systems which can handle quicker settlements.