Securities trading settlement periods and unsettled funds

In securities trading, unsettled funds refer to the proceeds generated from selling a security that have not yet completed the required settlement period. As of May 28, 2024, stocks, ETFs, and option trades follow a one-business-day (T+1) settlement period. This means if a trade is executed on a Monday, it is considered settled on Tuesday.

The settlement period is the timeframe between the execution of a trade and its finalization, during which the buyer must pay and the seller must deliver the security. While funds remain unsettled during this window, investors in cash accounts may often use the proceeds to make immediate subsequent purchases, provided the transactions do not result from a day trade.