The settlement date is the date on which a negotiation is final and the buyer must make the payment to the seller, while the seller delivers the assets to the buyer. The settlement date for stocks and bonds is usually two working days after the execution date (T+2). For government bonds and options, it is the next business day (T+1). For foreign exchange (FX) transactions, the date is two working days after the date of the transaction. Options contracts and other derivatives also have settlement data for transactions, in addition to the expiration dates of a contract. The financial market indicates the number of working days following a transaction in which a security or financial instrument must be paid and delivered. This delay between transaction days and billing days follows how accounts have been previously confirmed by physical delivery. In the past, security transactions were carried out manually and not electronically. Investors should wait for the delivery of a particular security that takes the form of an actual certificate and would only pay after receipt. Since delivery times may vary and prices may vary, market surveillance authorities set a period during which securities and cash must be delivered. Today, a transaction using modern technology is processed electronically in less time. Today, the money is transferred immediately, but the settlement period is maintained, both as a rule and as an agreement for traders, brokers and investors. Today, most online brokers require traders to have sufficient funds in their accounts before buying shares.
In addition, the industry no longer issues paper share certificates to represent the property. Although some share certificates still exist in the past, securities transactions are now almost exclusively covered by a so-called book entry procedure; and electronic trades are secured by bank statements. In order to help dealer dealers, other securities professionals and the invested public prepare for the implementation of a T+2 settlement round, the Commission has created an e-mail address – T2settlement@sec.gov – for the presentation of questions to SEC staff. This last article on the sales process deals with the billing period and what can go wrong while waiting to be completed. The transfer of ownership of securities was done manually; the seller had to deliver the share certificate by mail or by hand to the real estate agent who represented the buyer….