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. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  2. Cash Transaction

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

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

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

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

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

Hot Definitions
  1. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  2. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  3. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  4. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  5. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  6. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
Trading Center