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

    What Do T+1, T+2, and T+3 Mean?

    T+1, T+2, and T+3 denote the day settlement occurs on a transaction.
  2. Investing

    What's a Maturity Date?

    Maturity date is the final date when any remaining principal and any unpaid interest are due on a debt.
  3. Investing

    Make Ex-Dividends Work For You

    Find out how to keep your dividends out of the tax man's hands.
  4. Investing

    Understanding Taxes on Mutual Funds Dividends

    Learn about the basics of mutual fund dividend taxation, including how and why mutual funds pay dividends and when different tax rates apply to dividend income.
  5. Financial Advisor

    5 Ways to Date on a Budget

    Dating on a budget doesn't have to be boring. Try these 5 tips to find the best dates on a budget.
  6. Investing

    Target Date Funds: More Popular, Cheaper Than Ever

    How target date funds can help investors weather volatility when it comes to saving for retirement.
  7. Retirement

    The Unknown Dangers of Target Date Funds

    If they fit within your risk tolerance and have reasonable fees, target date funds can be an option.
  8. Investing

    How To Use The Dividend Capture Strategy

    Dividend capture strategies provide an alternative investment approach to income seeking investors.
  9. Retirement

    An Introduction To Target Date Funds

    Target date mutual funds can be an alternative to bonds and CDs for investors who do not wish to actively manage their savings. The reason: These financial products periodically reallocate fund ...
  10. Investing

    Due Diligence On Dividends

    Understanding dividends and how they work will help you become a more informed and successful investor.
Frequently Asked Questions
  1. Absolute P/E Ratio Vs. Relative P/E Ratio

    The difference between absolute P/E and relative P/E is easier when you know why each term is used.
  2. Why Do a Reverse Merger Instead of an IPO?

    Reverse mergers are often the most cost-efficient way for private companies to trade publicly.
  3. How Do Speculators Profit From Options?

    Options are a risky game, but you can learn speculators' tricks to use them to your advantage.
  4. What is the difference between a debenture and a bond?

    Debentures and bonds can both be used to raise capital, but debentures are typically issued to raise short-term capital.
Trading Center