Definition of Settlement date:
General: Deadline by which an executed order must be consummated: the day on which the seller must deliver what was sold and purchaser must pay for what was bought.
Settlement date may also refer to the payment date of benefits from a life insurance policy.
The settlement date is the date when a trade is final, and the buyer must make payment to the seller while the seller delivers the assets to the buyer. The settlement date for stocks and bonds is usually two business days after the execution date (T+2). For government securities and options, it's the next business day (T+1). In spot foreign exchange (FX), the date is two business days after the transaction date. Options contracts and other derivatives also have settlement dates for trades in addition to a contract's expiration dates.
Financial markets: Date on or before which funds and instruments must exchange hands between a buyer and a seller; as opposed to the transaction date (trading date) on which an order is executed. Settlement date follows the trading date by a fixed or specified number of business days; usually three days for stocks (shares) and bonds, and one (next) business day for government securities and listed options. See also maturity date and settlement option. Also called settlement day.
How to use Settlement date in a sentence?
- Settlement arose to deal with the complex process of clearing a transaction, but has since been reduced to as little as two business days (T+2) though the use of technology.
- Settlement date is the date on which a trade is final, when the buyer pays the seller and the seller delivers cleared assets to the buyer.
- It is the settlement date, and not the trade date, that denotes the legal transfer of ownership of an asset.
Meaning of Settlement date & Settlement date Definition