T+1 (T+2,T+3)

AAA

DEFINITION of 'T+1 (T+2,T+3)'

Abbreviations that refer to the settlement date of security transactions. The T stands for transaction date, which is the day the transaction takes place. The numbers 1, 2 or 3 denote how many days after the transaction date the settlement or the transfer of money and security ownership takes place.

INVESTOPEDIA EXPLAINS 'T+1 (T+2,T+3)'

For determining the settlement date the only days that are counted are those on which the stock market is open. T+1 means that if a transaction occurs on a Monday, settlement must occur by Tuesday. Likewise, T+3 means that a transaction occurring on a Monday must be settled by Thursday, assuming no holidays occur between these days. But if you sell a security with a T+3 settlement date on a Friday, ownership and money transfer does not have to take place until the following Wednesday.

Do not, however, think of the period between transaction and settlement as a flex time in which you can back out of the deal. The deal is done on the transaction day--it's just the transfer that does not take place until later.

RELATED TERMS
  1. Cash Transaction

    A transaction that is settled with cash on the same day as the ...
  2. Settlement Period

    The period of time between the settlement date and the transaction ...
  3. Paid-Up

    The state of a settlement when all payment obligations for a ...
  4. Trade

    A basic economic concept that involves multiple parties participating ...
  5. Transaction

    1. An agreement between a buyer and a seller to exchange goods, ...
  6. Transaction Costs

    Expenses incurred when buying or selling securities. Transaction ...
Related Articles
  1. Principal Trading and Agency Trading
    Investing Basics

    Principal Trading and Agency Trading

  2. Top 7 Questions About Currency Trading ...
    Forex Education

    Top 7 Questions About Currency Trading ...

  3. Can Insiders Help You Make Better Trades?
    Options & Futures

    Can Insiders Help You Make Better Trades?

  4. Anticipate Trends To Find Profits
    Forex Education

    Anticipate Trends To Find Profits

comments powered by Disqus
Hot Definitions
  1. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  2. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  3. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  4. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  5. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
  6. Bear Flattener

    A yield-rate environment in which short-term interest rates are increasing at a faster rate than long-term interest rates. ...
Trading Center