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Settlement date

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Definition of Settlement date

Settlement Date Image 1

Settlement date

The date on which payment is made to settle a trade. For stocks traded on US exchanges,
settlement is currently 3 business days after the trade. For mutual funds, settlement usually occurs in the
U.S.the day following the trade. In some regional markets, foreign shares may require months to settle.


Settlement date

The date when money first changes hands; i.e., when a buyer
actually pays for a security. It need not coincide with the issue date.



Related Terms:

Cheapest to deliver issue

The acceptable Treasury security with the highest implied repo rate; the rate that a
seller of a futures contract can earn by buying an issue and then delivering it at the settlement date.


Confirmation

he written statement that follows any "trade" in the securities markets. Confirmation is issued
immediately after a trade is executed. It spells out settlement date, terms, commission, etc.


Fail

A trade is said to fail if on settlement date either the seller fails to deliver securities in proper form or the
buyer fails to deliver funds in proper form.


Futures price

The price at which the parties to a futures contract agree to transact on the settlement date.



Implied repo rate

The rate that a seller of a futures contract can earn by buying an issue and then delivering
it at the settlement date. Related: cheapest to deliver issue


Nearby futures contract

When several futures contracts are considered, the contract with the closest
settlement date is called the nearby futures contract. The next futures contract is the one that settles just after
the nearby futures contract. The contract farthest away in time from settlement is called the most distant
futures contract.


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Announcement date

date on which particular news concerning a given company is announced to the public.
Used in event studies, which researchers use to evaluate the economic impact of events of interest.


Bank for International Settlements (BIS)

An international bank headquartered in Basel, Switzerland, which
serves as a forum for monetary cooperation among several European central banks, the Bank of Japan, and the
U.S. Federal Reserve System. Founded in 1930 to handle the German payment of World War I reparations, it
now monitors and collects data on international banking activity and promulgates rules concerning
international bank regulation.


Call date

A date before maturity, specified at issuance, when the issuer of a bond may retire part of the bond
for a specified call price.


Cash settlement contracts

Futures contracts, such as stock index futures, that settle for cash, not involving
the delivery of the underlying.


Consolidated Omnibus Budget Reconciliation Act (COBRA)

A federal Act
containing the requirements for offering insurance to departed employees.


Coupon dates

The dates when the coupons are paid. Typically a bond pays
coupons annually or semi-annually.


Date of payment

date dividend checks are mailed.


Date of record

date on which holders of record in a firm's stock ledger are designated as the recipients of
either dividends or stock rights.


Dates convention

Treating cash flows as being received on exact dates - date 0, date 1, and so forth - as
opposed to the end-of-year convention.


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Declaration date

The date on which a firm's directors meet and announce the date and amount of the next
dividend.


Declaration date

The date on which the board of directors has declared a dividend.



Effective date

In an interest rate swap, the date the swap begins accruing interest.


Ex-dividend date

The first day of trading when the seller, rather than the buyer, of a stock will be entitled to
the most recently announced dividend payment. This date set by the NYSE (and generally followed on other
US exchanges) is currently two business days before the record date. A stock that has gone ex-dividend is
marked with an x in newspaper listings on that date.


ex-dividend date

date that determines whether a stockholder is entitled to a dividend payment; anyone holding stock before this date is entitled to a dividend.


Ex-rights date

The date on which a share of common stock begins trading ex-rights.


Expiration date

The last day (in the case of American-style) or the only day (in the case of European-style)
on which an option may be exercised. For stock options, this date is the Saturday immediately following the
3rd Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of
an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding
Thursday.


Extension date

The day on which the first option either expires or is extended.


Fixed-dates

In the Euromarket the standard periods for which Euros are traded (1 month out to a year out) are
referred to as the fixed dates.


Good delivery and settlement procedures

Refers to PSA Uniform Practices such as cutoff times on delivery
of securities and notification, allocation, and proper endorsement.


Holder-of-record date

The date on which holders of record in a firm's stock ledger are designated as the
recipients of either dividends or stock rights. Also called date of record.


Immediate settlement

Delivery and settlement of securities within five business days.



Invoice date

Usually the date when goods are shipped. Payment dates are set relative to the invoice date.


Issue date

The date a security is first offered for sale. That date usually
determines when interest payments, known as coupons, are made.


Issue Date

date on which a policy is approved.


Maturity date

The date when the issuer returns the final face value of a bond
to the buyer.


Maturity Date

date on which a debt is due for payment.


Notification date

The day the option is either exercised or expires.


Official Settlements Account

An account within the balance of payments accounts showing the change in a country's official foreign exchange reserves. It is used to measure a balance of payments deficit or surplus.


Payment date

The date on which each shareholder of record will be sent a check for the declared dividend.


Payment date

The date established for the payment of a declared dividend.


Policy Date

date on which the insurance company assumes responsibilities for the obligations outlined in a policy.


Projected maturity date

With CMOs, final payment at the end of the estimated cash flow window.


Record date

1) date by which a shareholder must officially own shares in order to be entitled to a dividend.
For example, a firm might declare a dividend on Nov 1, payable Dec 1 to holders of record Nov 15. Once a
trade is executed an investor becomes the "owner of record" on settlement, which currently takes 5 business
days for securities, and one business day for mutual funds. Stocks trade ex-dividend the fourth day before the
record date, since the seller will still be the owner of record and is thus entitled to the dividend.
2) The date that determines who is entitled to payment of principal and interest due to be paid on a security. The record
date for most MBSs is the last day of the month, however the last day on which they may be presented for the
transfer is the last business day of the month. The record date for CMOs and asset-backed securities vary with each issue.


Record date

The date used to decide which shareholders will receive the dividend. The owners of the shares at the end of this day are entitled to the dividend.


Regular way settlement

In the money and bond markets, the regular basis on which some security trades are
settled is that the delivery of the securities purchased is made against payment in Fed funds on the day
following the transaction.


Settlement

When payment is made for a trade.


Settlement price

A figure determined by the closing range which is used to calculate gains and losses in
futures market accounts. settlement prices are used to determine gains, losses, margin calls, and invoice
prices for deliveries. Related: closing range.


Settlement rate

The rate suggested in Financial Accounting Standard Board (FASB) 87 for discounting the
obligations of a pension plan. The rate at which the pension benefits could be effectively settled off the
pension plan wished to terminate its pension obligation.


Skip-day settlement

The trade is settled one business day beyond what is normal.


Structured settlement

An agreement in settlement of a lawsuit involving specific payments made over a
period of time. Property and casualty insurance companies often buy life insurance products to pay the costs
of such settlements.


Structured Settlement

Historically, damages paid out during settlement of personal physical injury cases were distributed in the form of a lump-sum cash payment to the plaintiff. This windfall was intended to provide for a lifetime of medical and income needs. The claimant or his/her family was then forced into the position of becoming the manager of a large sum of money.
In an effort to create a more financially stable arrangement for the claimant, the Structured settlement was developed. A Structured settlement is an alternative to a lump sum cash payment in the resolution of personal physical injury, wrongful death, or workers’ compensation cases. The settlement usually consists of two components: an up-front cash payment to provide for immediate needs and a series of future periodic payments which are funded by the defendant’s purchase of one or more annuity policies. Those payors make payments directly to the claimant. In the unfortunate event of the claimant’s death, a guaranteed portion of the settlement may be directed to a beneficiary or his/her estate.
A Structured settlement is a guaranteed source of funds paid to the claimant or his/her family on a tax-free basis.


Trade date

In an interest rate swap, the date that the counterparties commit to the swap. Also, the date on
which a trade occurs. Trades generally settle (are paid for) 1-5 business days after a trade date. With stocks,
settlement is generally 3 business days after the trade.


Valuation Date

date on which valuation occurs.


Value date

In the market for Eurodollar deposits and foreign exchange, value date refers to the delivery date
of funds traded. Normally it is on spot transactions two days after a transaction is agreed upon and the future
date in the case of a forward foreign exchange trade.


Viatical Settlement

A dictionary meaning for the word viatica is "the eucharist as given to a dying person or to one in danger of death". In the context of Viatical settlement it means the selling of one's own life insurance policy to another in exchange for an immediate percentage of the death benefit. The person or in many cases, group of persons buying the rights to the policy have high expectation of the imminent death of the previous owner. The sooner the death of the previous owner, the higher the profit. Consumer knowledge about this subject is poor and little is known about the entities that fund the companies that purchase policies. People should be very careful when considering the sale of their policy, and they should remember a sale of their life insurance means some group of strangers now owns a contract on their life. If a senior finds it difficult to pay for an insurance policy it might be a better choice to request that current beneficiaries take over the burden of paying the premium. The practice selling personal life insurance policies common in the United States and is spilling over into Canada. It would appear to have a definite conflict with Canada's historical view of 'insurable interest'.


Forward delivery

A transaction in which the settlement will occur on a specified date in the future at a price
agreed upon on the trade date.


Forward trade

A transaction in which the settlement will occur on a specified date in the future at a price
agreed upon the trade date.



 

 

 

 

 

 

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