1. What is the T+1 settlement cycle?
The transaction date, or T, is the date on which the operation of buying or selling securities is executed. The settlement date is the date on which the transaction is settled, i.e. the securities or funds are officially transferred. Under the new T+1 settlement cycle, all applicable securities transactions from US financial institutions will settle in one business day after their transaction date.
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Example
If you execute a transaction on Monday, it will settle on Tuesday (assuming Tuesday is not a holiday).
2. When will the T+1 settlement start?
The new T+1 settlement cycle will take effect from May 28, 2024 (EST).
3. Which securities are applicable to the T+1 settlement cycle?
The T+1 settlement cycle will apply to the same types of securities transactions covered by the T+2 settlement cycle. These include stocks, bonds, municipal securities, exchange-traded funds, certain mutual funds, and limited partnerships traded on US exchanges. For the T+1 impacted product scope, see https://www.dtcc.com/-/media/Files/PDFs/T2/T1-Product-List-Jan-2024.pdf
*Note: The T+1 settlement cycle already applies to US stock options.
4. What does this mean for trading?
The new T+1 settlement cycle does not impact your trading. You can still engage in day trade.
5. How does this impact withdrawal?
You will have quicker access to your funds with the shortened settlement cycle for US stocks. For Australia and Hong Kong stocks, however, the settlement cycle remains T+2, meaning that you can withdraw your funds when they are settled two business days after the transaction date.
6. How does this impact the calculation of buying power?
The new T+1 settlement cycle does not impact the calculation of buying power.