What Does Settlement Date Mean?

In one of its meanings, settlement date refers to that exact date which serves as a deadline for transacted or effectuated security trades to be arranged. To put it into the simplest terms, settlement date is the date by which the person who have initially bought and received securities must put his or her financial obligations to rights. This means a security buyer is obliged to pay the seller out until the settlement date.

The other meaning of ‘settlement date’ refers to the date at which a life insurance contract’s benefit payments are due, so they should be received by the policy owner or beneficiary.

Settlement Date Explained

One should know that settlement dates are around three-four days for stocks and bonds which are calculated based on business days and after the purchase was made. However, for government securities and for options the settlement date may be as soon as the following business day after the purchase.