What Is a Settlement Date?

In the world of investments and finance, the settlement date can be either a day of great relief or one of great regret. It is essentially the date when the cash is paid.

In Stocks

The settlement dates is the day when the cash for stocks traded exchanges hands. Investors who purchased must pay up. The cash from stocks sold is paid to investors on this date as well. According to Investopedia, this date is three business days after stocks or bonds are traded.

In Insurance

When a life insurance policy is executed, the settlement date is the day when the funds are paid.

In General

Settlement date is a term given to any predetermined date that is set for a debt to be paid.

Features

The settlement date is recorded when you give the order to your broker.

Clarification

A settlement date is different from the trade date. The trade date is when the transaction is executed. The price to be paid for the securities is the value as of the trade date. The settlement date is simply the date when the money changes hands.

References

• Investopedia
• Investorwords
• The Motley Fool