Regular Way (Default) Settlement
Settlement occurs when the buyer receives the purchased securities and the seller receives payment for the securities. Specifically, securities are settled when the ownership of the securities is transferred from the seller to the buyer and the money is transferred from one broker-dealer to another. Regular way settlement refers to the amount of time involved in the regular settlement cycle for a security. For most securities, regular way settlement occurs two business days after the trade date. This is often represented by T + 2, for trade date plus two business days. A trade is considered completed (confirmed) on the settlement date. Regular way settlement for U.S. Treasuries and options is one business day after the trade date. Cash settlement is settlement that occurs on the same day as the trade date.
The following securities are exempt from regular-way settlement rules:
• unlisted limited partnership transactions
• sales to an underwriter or an initial purchaser of a new security in an initial public offering, if the sale is made on the date the securities are priced and if the securities are priced after 4:30 p.m. ET.
The latter exemption allows a settlement date no later than T + 4 to allow time for the preparation of a final prospectus that mu