Trade Settlement Decreasing to 1 Day

[PaunchyPirate]

Schwab just notified me that effective May 28th, trades will settle on the next business day (T+1) for most U.S. and Canadian securities traded on U.S. exchanges.

It says it is an industry-wide change, not just at Schwab.

"This is an industry-wide change for most security transactions, which includes stocks, bonds, municipal securities, exchange-traded products, unit investment trusts, certain mutual funds and limited partnerships that trade on an exchange. The T+1 settlement period may benefit investors like you by reducing credit and liquidity risks present between the trade date and the settlement date."

This is good news for the consumer, I think.

 

[Al18]

Yes, that is good news. Link from SEC discussing the change https://www.sec.gov/news/press-release/2023-29

 

[DrRoy]

Works for me.

 

[RetMD21]

Cool, I thought that T+2 was great

 

[pjm-7]

Gee, I'm really old. When I got in the brokerage business in 1981 it was T+5. You had that long to turn in your stock certificates. Don't know what I'll do with all of that extra time on my hands.

 

[dmpi]

If you're going to sell stock and use the proceeds to buy a mutual fund I think you can now do this on same day. Before this you had to sell your stocks (T+2), and on the next day after the 1:00 close you could buy your mutual fund (T+1).



Disclaimer: After May 28th I'm going to test it out first before I do any big transactions.

 

[audreyh1]

Saw that email.

 

[mrfeh]

Generally a good thing in my book, but make sure you get things right because it means less time to correct any mistake.

Last summer I sold some taxable funds and failed to specify which lots I wanted to sell. The lots chosen by default would've caused a much larger capital gain than wanted. Good news is that I was able to specify which lots the next day, because the trade had not yet settled.

 

[jim584672]

About time, long overdue.