Stock Markets Exposed
What does "settles on" mean in the context of after-hours stock trading?
Hi, if I place a stock trade after hours, it is filled, and my broker reports that the trade "settles on" a date three days from now, what does that mean? Is the trade not completely finalized the instant it is filled?
Public Comments
- Investment transactions have two dates to them. The trade date which is the day you complete the buy or sell and the settlement date. The settlement date is the day that you receive / deliver the security and that payment is made / received. The settlement date can be the trade date, the day after or in the case of most stocks 3 days later. The difference in dates allows the firms involved to clear the trades and complete the necessary financial transfers. In the past stocks had a 5 day settlement and the industry is currently moving towards a 1 day settlement as electronic transfers have replaced a lot of slower manual transmission methods.
