What is the difference between the trade date and settlement date?

FOr instance, if there is a trade date of 9/1/2011, and a settlement date of 9/5/2011, when does the "transaction" or "sale" actually take place? Or, Considering the different approaches to recognizing sales/tranasactions, on which date (trade/settlement) do the securities and cash physically change hands?|||A trade date is the date the order was executed, the settlement date is the day that money is due if you are a buyer or the securities must be received if you are a seller.



The settlement date is when your brokerage firms must pay the seller for the stock they sold and the seller must deliver to you brokerage firm the stock that you bought. However all of the movement of money and securities are done through a clearing corp or depository. But to put it in your terms, the settlement date is the day cash and securities change hands



To confuse you more, all transactions in the securities industry are posted to the accounts as of the settlement date of the transaction. So when you receive your account statement the dates shown for the transactions will be the settlement date.





DAVID - when you buy your account is posted as of the settlement date and the money is charged on settlement date - not trade date.|||What Does Settlement Date Mean?

1. The date by which an executed security trade must be settled. That is, the date by which a buyer must pay for the securities delivered by the seller.



2. The payment date of benefits from a life insurance policy.



The settlement date for stocks and bonds is usually three business days after the trade was executed. For government securities and options, the settlement date is usually the next business day.



Trade date is simply the date the trade is made. The cash is debited from your account immediately.