Q. Which one of the following statements best describes the ‘T+1 settlement cycle’?

[A] Trades are cleared and funds exchanged one day after the trade execution.

[B] Trades are finalized and settled two business days after the order is placed.

[C] The process of trade confirmation and payment takes place immediately upon execution.

[D] Settlements occur on a weekly basis, regardless of the trade date.

Answer: A
Notes:

Explanation – The ‘T+1 settlement cycle’ means that trades are cleared and funds exchanged one day after the trade execution.

In the T+1 settlement cycle, the transaction is completed within one day of the trade being executed. This means that the transfer of funds and securities between the buyer and seller is completed within 24 hours, enabling faster settlement and reducing the risk of default.

Source: Forum IAS

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