FINRA Series 7Processes and Confirms TransactionsEasy
A registered representative executes a regular-way trade in listed common stock for a customer on Monday. Under current settlement rules, on what day must the trade settle?
- AMonday (same day)
- BTuesday (T+1)
- CThursday (T+3)
- DWednesday (T+2)
Show answer & explanationAnswer & explanation
Correct answer: B. Tuesday (T+1)
Since May 28, 2024, regular-way settlement for most securities, including equities and corporate bonds, is T+1 (one business day after trade date). A trade executed Monday settles Tuesday.
Why the other options are wrong
- A. Cash trades settle same day, not regular-way trades.
- C. T+3 was the settlement cycle used before 2017.
- D. T+2 was the prior settlement standard before May 2024.
Regular-Way Settlement (T+1)
The standard settlement cycle for most securities transactions, currently one business day after the trade date.
- Effective May 28, 2024 for equities, corporate and municipal bonds
- Government securities and options typically settle T+1 as well
- Cash trades settle same day (T+0)
Memory trick: One day later, money's better — T+1.