Learn · Explainer

Trade settlement (T+1)

When cash and shares change hands after a stock trade, what 17 CFR 240.15c6-1 requires, and how the SEC shortened the standard cycle from T+2 to T+1.

The short answer

Settlement is the actual exchange of cash and securities after a trade. For most U.S. broker-dealer stock trades, the standard cycle is now one business day after the trade date, written T+1. The SEC adopted that change in 2023, with a compliance date of May 28, 2024, shortening the prior T+2 cycle. The parties can agree to a different timetable at the time of the trade, and some securities are carved out of the standard rule.

What the rule says

17 CFR 240.15c6-1 is the settlement-cycle rule. Except as provided in later paragraphs, a broker or dealer may not enter into a contract for the purchase or sale of a security that provides for payment and delivery later than the first business day after the date of the contract, unless the parties expressly agree otherwise at the time of the transaction. Government securities, municipal securities, commercial paper and a few other categories are outside that standard, and the rule also has a later-settlement allowance for certain underwritten offerings priced after 4:30 p.m. Eastern.

Trade date is the day the order is executed. Settlement date is the day cash and the security actually change hands. Until settlement, the trade is a contract. After settlement, the buyer is the record owner for that transfer and the seller has been paid. Dividend record dates and other ownership cutoffs are counted from settled positions, which is why the settlement cycle and the ex-dividend date are connected.

The move from T+2 to T+1

In a February 15, 2023 press release, the SEC announced final rule changes to shorten the standard settlement cycle for most broker-dealer transactions in securities from two business days after the trade date (T+2) to one (T+1). The compliance date stated in that release was May 28, 2024. The same release described related changes aimed at faster allocation, confirmation and affirmation of institutional trades.

T is the trade date; T+1 is the next business day, when standard stock trades now settle.
Rule 15c6-1 is the regulation; parties may agree to a different cycle at the time of the trade.
Some instruments, including government and municipal securities, are treated separately from the standard cycle.

Common questions

What does T+1 mean?

The standard settlement cycle is one business day after the trade date. A stock trade executed on Tuesday ordinarily settles on Wednesday, unless that day is a holiday.

When did T+1 start?

The SEC's February 15, 2023 press release set a compliance date of May 28, 2024 for the final rules that shortened the cycle from T+2 to T+1.

Is every security on T+1?

No. Rule 15c6-1 carves out exempted, government and municipal securities, commercial paper and certain other contracts, and allows a later cycle when the parties expressly agree at the time of the trade.

What happens on settlement day?

Cash is paid and the security is delivered. Until then the trade is a contract; after that the buyer is the owner of record for that transfer.

How does settlement relate to dividends?

The ex-dividend date is built around the settlement cycle, so that a buyer has time to settle in time to be a holder of record. See the ex-dividend and record dates page.

Disclosures

Editor holdings: The editor holds no position in any company named on this page. As of Nov 11, 2026.
Compensation: Nobody paid for this page. No affiliate links on this page.
Sources: Each company's own SEC filings, linked next to each number.
Last updated: Nov 10, 2026

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