Trade Settlement Cycle Reference (T+1, T+2, T+0)
Direct answer: U.S. equity and ETF trades settle T+1 (one business day after trade date) as of May 28, 2024 (reduced from T+2). Options settle T+1. U.S. corporate and municipal bonds settle T+1. U.S. Treasury securities settle T+1 (some trade T+0). Mutual fund trades settle T+1 at the next NAV. Cash from stock sales is available immediately for new purchases at most brokers, but the settlement cycle determines when you must have cash or securities to support a trade.
Settlement Cycles by Security Type
| Security Type | Settlement Cycle | Notes |
|---|---|---|
| U.S. Stocks (equity) | T+1 | Changed from T+2 to T+1 on May 28, 2024 |
| U.S. ETFs | T+1 | Same as equities since ETF creation/redemption requires equity settlement |
| U.S. Equity Options | T+1 | Exercise/assignment settlement: T+1 |
| U.S. Corporate Bonds | T+1 | Effective May 28, 2024 (aligned with equities) |
| U.S. Municipal Bonds | T+1 | Same change date as equities |
| U.S. Treasury Securities | T+1 (on-the-run); T+0 available | Most Treasury trading settles next business day |
| Mutual Funds | T+1 at next NAV | Orders placed by cutoff (typically 4:00 PM ET) execute at next NAV |
| Foreign Stocks (ADRs) | T+1 | ADRs settle like domestic equities |
| Foreign Stocks (local market) | T+2 or longer | Europe T+2; Japan T+2; India T+1; China T+0 for A-shares |
| Cryptocurrency (major exchanges) | T+0 (immediate) | Exchange-internal settlement; blockchain settlement varies |
Source: SEC: Shortening the Securities Transaction Settlement Cycle to T+1 (Release 34-94378). Last verified: September 2026.
Frequently asked questions
Why did the SEC shorten settlement from T+2 to T+1?
The SEC shortened U.S. equity settlement from T+2 to T+1 effective May 28, 2024. Reasons: (1) reduce counterparty risk -- shorter settlement means less time for either party to default before the trade completes; (2) reduce margin requirements -- clearing houses (DTCC, OCC) require deposits from broker-dealers based on settlement risk; T+1 reduces the required collateral; (3) the GameStop-Reddit episode (2021) highlighted that clearing house margin calls forced Robinhood to restrict buying, at least partly due to T+2 settlement risk; T+1 reduces this problem; (4) technology has made faster settlement feasible. The U.S. was lagged behind India (already T+1) and some other markets.
What is the difference between trade date and settlement date?
Trade date (T) is the day you execute the trade. Settlement date is when cash and securities actually exchange hands. If you sell stock on Monday (T), under T+1 settlement, you receive cash on Tuesday (T+1). If you buy stock on Monday, you must have cash available or deposited by Tuesday. The practical implication for traders: (1) you can often use the proceeds from a sale immediately for new purchases at most brokers (they extend intraday credit); (2) for cash accounts (no margin), you must wait for settlement before withdrawing sale proceeds; (3) options exercise and assignment settlement is T+1 -- if your option is exercised, you have one business day to deliver stock or cash.
How does T+1 settlement affect international investors?
T+1 creates operational challenges for non-U.S. investors trading U.S. markets: (1) FX conversion -- international investors need USD to settle U.S. stock purchases; if they sell non-USD assets to fund the purchase, the FX conversion and foreign settlement may not complete in time to fund the U.S. T+1 settlement; (2) custodian alignment -- global custodians must adjust their cross-border processes to fund U.S. trades faster; (3) securities lending -- securities on loan at T cannot be recalled fast enough to settle a sale under T+1 in some edge cases. The EU, UK, and Japan were considering moving to T+1 as of 2024-2025, partially prompted by the U.S. change. Globally harmonizing settlement cycles would reduce FX mismatch and operational risk.