Settlement date is a

securities A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some countries and languages people commonly use the term "security" to refer to any for ...

industry term describing the

date Date or dates may refer to: *Date (fruit), the fruit of the date palm (''Phoenix dactylifera'') Social activity *Dating, a form of courtship involving social activity, with the aim of assessing a potential partner ** Group dating *Play date, a ...

on which a

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

(bonds, equities, foreign exchange, commodities, etc.) settles. That is, the actual day on which transfer of cash or assets is completed and is usually a few days after the trade was done. The number of days between

trade date Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

and settlement date depends on the security and the convention in the market it was traded. For example when settling a share transaction on the

London Stock Exchange London Stock Exchange (LSE) is a stock exchange in the City of London, England, United Kingdom. , the total market value of all companies trading on LSE was £3.9 trillion. Its current premises are situated in Paternoster Square close to St Pau ...

this is set at trade date + 2 business days. In USA, the transfer period was changed from 3 to 2 days in 2017. It is not necessarily the same as

value date In finance, value date is the date when the value of an asset that fluctuates in price is determined. The value date is used when there is a possibility for discrepancies due to differences in the timing of asset valuation. It usually applies to ...

(when the settlement ''amount'' is calculated). For instance, the

back office A back office in most corporations is where work that supports ''front office'' work is done. The front office is the "face" of the company and is all the resources of the company that are used to make sales and interact with customers and client ...

may require a few days to make

payment A payment is the voluntary tender of money or its equivalent or of things of value by one party (such as a person or company) to another in exchange for goods, or services provided by them, or to fulfill a legal obligation. The party making the p ...

. This gap (between valuation and settlement) is often written into the financial

contract A contract is a legally enforceable agreement between two or more parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, services, money, or a promise to tran ...

, although the actual settlement date can also differ from that originally specified because of problems or errors. It is occasionally referred to as "contractual settlement date".

References

* {{cite book , last=Gastineau , first=Gary L. , author2=Mark P. Kritzman , title= Dictionary of Financial Risk Management , year= 1996 , isbn= 1-883249-14-7 Settlement Date defined as the actual date of completion (page 251).
investorwords.com
defines "settlement date" as the last possible date of intended settlement. Accessed October 12, 2007. Securities (finance) Bond valuation Swaps (finance) Settlement (finance)

See also

References