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. Term

    Understanding the Maintenance Margin

    A maintenance margin is the minimum amount of equity that must be kept in a margin account.
  2. Investing Basics

    Brokers and RIAs: One and the Same?

    Brokers and registered investment advisors have some key differences. Here's what you need to know.
  3. Professionals

    Is a Google Robo-Advisor on the Horizon?

    It's possible that Google is looking to get into the robo-advisor business, either as a new venture or as a way to provide more benefits to employees.
  4. Professionals

    Understanding Series 6

    Upon successful completion of the Series 6, an individual will have the qualifications needed to sell open end mutual funds and variable annuities
  5. Professionals

    Top Strategies on How to Become a Stock Broker

    Gunning to be a stock broker and want an edge? Here's some veteran advice.
  6. Trading Systems & Software

    Steps to Starting Up an Independent Broker Dealer

    Launching your own broker-dealer is a lot of work, but the potential payoff is great, both personally and financially.
  7. Professionals

    Understanding Series 63

    Series 63 is a securities license that entitles the holder to sell securities in a particular state.
  8. Professionals

    How To Answer Option Questions On The Series 7 Exam

    Learn how to answer option questions on the Series 7 exam. Pass your Series 7 exam with the help of these tips.
  9. Investing Basics

    Online Portfolio Management, DIY or Fee-Based Financial Advisor: Which Is Right For You?

    Should you use an online financial planning service, or do professional, fee-based financial planners justify their higher costs?
  10. Insurance

    Municipal Bond Tips For The Series 7 Exam

    Learn to distinguish between general obligation and revenue bonds to ace this test.
RELATED TERMS
  1. Series 6

    A securities license entitling the holder to register as a limited ...
  2. Comprehensive Automated Risk Data ...

    The Comprehensive Automated Risk Data System (CARDS) is an initiative ...
  3. Corporate Financing Committee

    A regulatory group that reviews documentation that is submitted ...
  4. Series 79

    A examination to ensure a candidate is qualified to become a ...
  5. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  6. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
RELATED FAQS
  1. How does a broker decide which customers are eligible to open a margin account?

    Brokers have the sole discretion to determine which customers may open margin accounts with them, although there are regulations ... Read Full Answer >>
  2. What are some of the major regulatory agencies responsible for overseeing financial ...

    There are a number of agencies assigned to regulate and oversee financial institutions and financial markets, including the ... Read Full Answer >>
  3. Why is the Nasdaq more heavily weighted to tech stocks than other stock exchanges?

    The Nasdaq became the world's first electronic stock exchange at its inception in 1971. The exchange's dedication to advancing ... Read Full Answer >>
  4. How are margin calls regulated by the SEC?

    The Federal Reserve Board and the Financial Industry Regulatory Authority (FINRA), not the Securities and Exchange Commission ... Read Full Answer >>
  5. If I have only a limited amount of time to study for the Series 6, what should I ...

    The Series 6 Investment Company and Variable Contracts Products Representative Qualification Examination is administered ... Read Full Answer >>
  6. How does an underwriter syndicate work together on an initial public offering (IPO)?

    An underwriting syndicate is a group of investment banks that share the responsibility of marketing the shares of a company ... Read Full Answer >>
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!