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Question

Difficulty: EasySettlement Dates, Trade Confirmations, and Corporate Actions

A retail investor executes a regular-way purchase of corporate common stock on Monday, June 1. Assuming there are no financial market holidays during the week, on which day must regular-way settlement occur?

  1. Tuesday, June 2Answer
  2. B
    Wednesday, June 3
  3. C
    Thursday, June 4
  4. D
    Monday, June 1

Answer

Tuesday, June 2
Under current SEC and FINRA rules, regular-way settlement for corporate equity securities occurs on T+1, which is one business day after the trade date. Purchasing stock on Monday means settlement occurs on Tuesday.

Step-by-Step Solution

1
Identify the trade date and the regular-way settlement requirement for corporate stock.
Trade Date = Monday, June 1; Regular-Way Settlement = T+1 (Trade Date + 1 business day).
Standard SEC and FINRA rules establish a T+1 regular-way settlement cycle for corporate equity securities.
2
Add one business day to the trade date.
Monday + 1 business day = Tuesday, June 2.
Since there are no market holidays, the next business day following Monday is Tuesday.

Key Concept

Regular-Way Settlement Cycle (T+1)
Estimated Time:45s
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Topics

Settlement Dates, Trade Confirmations, and Corporate Actions