What is settlement date?

Settlement day is the date by which all the shares and bonds transactions have to be finished. This means that the seller has to deliver the preferred stock and the investor has to pay for it. The settlement date is usually set after the transaction date. It’s referred to as T+ the needed time, transaction date plus the number of days until the settlement day arrives. In the USA usually for stocks the settlement day is 3 and for government bonds is for 1 day. In translation after the investor has made the purchase on the transaction date he will have one or three days at his disposal to pay for the purchased securities and the issuer has the same time frame to deliver the already sold securities. It’s important to know that in foreign country’s it could take up to a month until the settlement date is reached. Also it’s good to know that when the investors works on his tax return the he uses the trade date and not the settlement date to figure out long and short-term capital gains.