Settlement

How do investors exchange stock certificates and funds?

Update : Aug. 29, 2003

Answer:

Investors are required to bring the stock certificates and cash required to cover their transactions to their securities company's offices by 09:00 on the third business day (fourth business day for transactions taking place on ex-dividend or ex-rights dates) after the transaction date.

Thus for transactions on Monday, stock certificates and cash must be delivered by 09:00 on Thursday; and for transactions on Friday by 09:00 on the following Wednesday.

However, in reality most investors already have stock certificates and cash deposited in their accounts held at the securities companies. This means that they don't actually have to worry about remembering to take them to the securities company's office. All that needs to happen is for the securities company to make the necessary transfers and check the balances.

Relationship between transaction and settlement