Settlement (T+1)

Agreeing a trade and completing it are two different moments. The order fills at a price the instant a buyer and a seller are matched, and the transfer of the shares one way and the money the other happens afterward, on what the industry calls the settlement date. In the US, stock trades settle one business day after the trade, a rule known as T+1 since it shortened from two days in May 2024.

For somebody holding for years it is close to invisible. It matters mostly for cash timing: proceeds from a sale become fully available only after settlement, so money from a Monday sale is not necessarily spendable on Monday, and brokers apply their own rules to a cash account that spends unsettled proceeds.

The shortening also moved a date beginners run into. Because settlement now takes one business day, the ex-dividend date falls on the same business day as the record date rather than the day before it. Anyone reading older guidance about buying a day ahead of the record date is reading a rule that has since changed.