Securities Markets - Market Terms

There are a number of market terms that you should know, particularly those that relate to dates that impact securities transactions.

Trade and Settlement Dates
The trade date for the purchase or sale of a security is the date on which the transaction is executed. The settlement date is the date on which the transaction must be completed, or the date on which the buyer pays for the securities and the seller delivers them.

Regular-way settlement for corporate stocks and bonds and municipal securities is three days after the trade date (T+3). For Treasury securities and options, settlement is T+1, or one day after the transaction. Cash transactions settle on the same day as the trade date.


Exam Tips and Tricks
Trade settlement is one of the most fundamental concepts for you to understand as a representative. You should know how much time each type of security requires to be fully settled.


Dividend Distribution Dates
Ex-dividend and date of record (record date) are important dates to know, whether you are a broker or investor. Understanding the dates of the dividend payout process can be tricky, especially if you are a beginner. Clear up any of your confusion by reading the following short article: Declaration, Ex-dividend and Record Date Defined.

  • Ex-dividend: When a stock trades without its next dividend payment, it is said to be trading ex-dividend. It is important for you to understand this concept in relation to trading and settlement dates. Because regular-way settlement occurs three business days after the trade date (T+3), the ex-dividend date will always be two days prior to the stock's record date.

  • Record Date:When a board of directors announces a dividend payment, it will specify the date by which an investor must own the stock and be registered on the company's records as a shareholder in order to receive the dividend. This date is called the record date.

  • Payment Date: The date the dividend is actually paid out to the shareholders.
Price Terms


Related Articles
  1. Investing Basics

    What is a Settlement Date?

    A settlement date is the day a security trade must be settled.
  2. Professionals

    Trading Terminology

    NASAA Series 65: Section 17 Trading Terminology. In this section terms used in trading securities, which you should be familiar with.
  3. Professionals

    Dividend Payment Procedures

    CFA Level 1 - Dividend Payment Procedures. Looks at the procedures for paying out dividends. Learn how the declaration, ex-dividend, holder-of-record, and payment date are related.
  4. Investing Basics

    What is a Record Date?

    The date established by an issuer of a security for the purpose of determining the holders who are entitled to receive a dividend or distribution.
  5. Investing

    Ex-Dividend Date

    Not too sure what an ex-dividend date is? Find out here and learn how and when you can take advantage of a stock's dividend.
  6. Professionals

    Realized and Expected Holding Period Return

    Holding period return is return on investment earned over a certain period of time for which the investment has been held. This type of return is not necessarily annualized, regardless of whether ...
  7. Options & Futures

    Understanding How Dividends Affect Option Prices

    Learn how the distribution of dividends on stocks impacts the price of call and put options, and understand how the ex-dividend date affects options.
  8. Professionals

    Cash Dividends And Dividend Payment

    Learn how to dividends work.
  9. Professionals

    Settling Transactions In The Secondary Market

    FINRA Series 7 online study guide - Securities Transactions
  10. Professionals

    C. Order Tickets

    Prior to executing a customer’s order the representative must fill out the appropriate order ticket and present it to the trading department or wire room for execution.
RELATED TERMS
  1. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  2. Record Date

    The cut-off date established by a company in order to determine ...
  3. Payment Date

    The date on which a declared stock dividend is scheduled to be ...
  4. Trade Date

    The month, day and year that an order is executed in the market. ...
  5. Dated Date

    The date at which interest begins to accrue on a fixed-income ...
  6. Trade Date Accounting

    A method company accountants and bookkeepers use to record transactions ...
RELATED FAQS
  1. How can I find out what date(s) I am supposed to be entitled to ex-dividends?

    Understand the various dates associated with payment of stock dividends and specifically how the determining ex-dividend ... Read Answer >>
  2. If a company moves its dividend record date forward, does the ex-dividend date change ...

    When a dividend is declared, there are three important dates for investors: the dividend payable date, the dividend date ... Read Answer >>
  3. Do I own a stock as of the trade date or the settlement date?

    When it comes to buying shares, there are two key dates involved in the transaction. The first date is the trade date, which ... Read Answer >>
  4. Why should I pay attention to a dividend's ex-dividend date?

    Understand the importance of the ex-dividend date as the critical date for determining which stockholders qualify to receive ... Read Answer >>
  5. How is the ex-dividend date for a dividend on a stock determined?

    Review the important dates concerning dividend payments and learn how the ex-dividend date is determined when a company declares ... Read Answer >>
  6. How can I find out the ex-dividend date for a stock's dividend?

    Learn about the various information sources from which investors can obtain information about upcoming ex-dividend dates ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center