Trade Date vs Settlement Date, What is T + 2?
When you buy or sell a stock, the transaction might seem instant — but behind the scenes, there’s a formal process that takes a couple of days to fully complete. This is where T+2 settlement comes in.
What Is the Trade Date (T)?
The Trade Date (known as T) is the day you make the agreement to buy or sell a stock.
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This is the date the order is placed and matched with a buyer or seller.
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Prices are locked in based on this day’s trading.
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You’ll see the trade appear in your account almost immediately.
Example:
If you buy 100 shares of a company on Monday, that’s your T (Trade Date).
What Is the Settlement Date (T+2)?
The Settlement Date is when the actual exchange of money and shares happens.
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As of now in most major markets, settlement follows a T+2 system.
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This means two business days after the trade date, ownership is officially transferred.
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Your broker sends payment to the seller, and the shares are delivered into your account.
Example:
You bought shares on Monday (T) → The trade is settled on Wednesday (T+2).
Why Does Settlement Take 2 Days?
While trading platforms are digital, the backend process involves:
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Verifying trade details
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Transferring funds between financial institutions
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Moving the shares between accounts
This short delay ensures everything is cleared and accurate before finalizing the transaction.