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Question

Difficulty: EasySettlement Dates, Trade Confirmations, and Corporate Actions

An investor executes a regular-way trade to buy shares of a corporate stock on Monday, October 12. Assuming there are no business holidays during the week, on which day does the trade settle?

  1. Tuesday, October 13Answer
  2. B
    Wednesday, October 14
  3. C
    Thursday, October 15
  4. D
    Monday, October 12

Answer

Tuesday, October 13 (one business day after the trade date).
Under SEC and SRO rules, standard regular-way settlement for corporate equity trades follows a T+1 schedule (Trade Date plus one business day). For a trade executed on Monday, October 12, settlement officially occurs on Tuesday, October 13.

Step-by-Step Solution

1
Identify the trade date and the applicable settlement cycle for corporate stock trades.
Trade Date = Monday, October 12. Standard regular-way settlement for equity transactions is T+1 (Trade date plus 1 business day).
FINRA and SEC rules mandate a T+1 regular-way settlement timeframe for corporate securities.
2
Calculate the settlement date by adding 1 business day to the trade date.
Monday, October 12 + 1 business day = Tuesday, October 13.
Since Tuesday is a standard business day, ownership transfer and payment completion take place on Tuesday.

Key Concept

Regular-Way Settlement Cycle (T+1)
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Topics

Settlement Dates, Trade Confirmations, and Corporate Actions