Settlement Date
The most typical kind of settlement occurs on the third business day following the trade date (often noted as T+3). This is called regular way settlement for OTC securities. Thus, if a trade is executed on Friday, June 1, the regular way settlement date will occur on Wednesday, June 6, and delivery and payment must occur on that date.
In cases where a transaction is settled in cash, delivery and payment are exchanged on the same day of the trade. This is also called (not surprisingly) same-day settlement. A cash settlement transaction must be finalized on or before 2:30 PM Eastern Time.
Payment for all transactions is typically received at the time of delivery. The seller can require the buyer to make payment by certified check, cashier’s check, bank draft, or cash.
If the seller cannot deliver the securities by the regular way settlement date, the seller can ask for a seller’s option. If the buyer consents, a seller’s option will allow the seller to deliver the securities on a later date. If the seller wants to make a delivery prior to the option date