Question

Settlement date for corporate securities in a cash or margin account occurs:

A) T+1 (one business day after the trade date)
B) T+2 (two business days after the trade date)
C) T+3 (three business days after the trade date)
D) T+4 (four business days after the trade date)

Answer 1

The settlement date for corporate securities in a cash or margin account is T+2, or two business days after the trade date, due to a change made by the SEC in 2017 to increase market efficiency. The correct option is B.

Step-by-step explanation:

The settlement date for corporate securities in a cash or margin account is currently T+2, which means it occurs two business days after the trade date. This change was implemented in September 2017 by the Securities and Exchange Commission (SEC), designed to reduce credit and market risk by shortening the settlement cycle.

Previously, the standard was T+3, but due to advancements in technology and efforts to increase efficiency in the financial markets, the settlement cycle was shortened.