Settlement
Definition · Level 0 · Market basics
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The step that completes a trade: the buyer’s cash and the seller’s shares actually change hands, some days after the trade is agreed.
Example
You buy shares on Monday; the trade is agreed at once, but the cash leaves your account on settlement day.
Where Tradecraft teaches it
Level 0 · Market basics, in the lesson “Clearing, settlement & regulators”: How a trade is guaranteed and completed, and who writes the rules.
Related terms
- ClearinghouseCentral counterparty that steps in after a trade as buyer to every seller and seller to every buyer, so each side relies on it rather than on a…
- FINRAFinancial Industry Regulatory Authority: the self-regulatory organization, overseen by the US securities regulator (the SEC), that licenses and…
- SECSecurities and Exchange Commission: the US federal regulator of securities markets.
- T+1The US settlement cycle for stocks, exchange-traded funds (ETFs) and corporate bonds since May 28, 2024: cash and securities change hands one…
- 52-week high / all-time highThe highest price over the past year of trading / the highest price ever recorded (split-adjusted).
- Account equityWhat you would keep after selling everything in the account and repaying the loan: market value minus what you owe.