What Is a Settlement Period?

What Is the Settlement Period?

By Robin Hartill, CFP – Updated Oct 18, 2025 at 2:07 PM EST

Key Points

T+2 settlement period shifts to T+1 in May 2024, reducing time to finalize trades.
Shortening settlement period aims to decrease default risks and margin costs.
Violating settlement rules may result in trading restrictions and financial penalties.

When you buy or sell securities, there's a settlement period before the transaction is finalized. The settlement period is the window of time between when the buyer pays for the security and when they actually take ownership. Currently, the settlement period for most securities is T+2, or "trade date plus two days," but in 2024, that will be shortened to T+1, or "trade plus two days." Let's unpack what all this means for you and your investments.

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Person using a tablet to look at the performance of stocks. — Image source: Getty Images

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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Robin Hartill has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.