Settlement date

The date on which a securities buyer must pay for a purchase or a seller must deliver the securities sold. In general, settlement must be made on or before the third business day following the transaction date.

The settlement date is the date by which a securities transaction must be finalized.

By that date the buyer must pay for the securities purchased in the transaction, and the seller must deliver those securities.

For stocks, the settlement date is three business days after the trade date, or what's referred to as T+3. For options and government securities, the settlement date is one day, or T+1, after the trade date.

In figuring long- and short-term capital gains on your tax return, you use the trade date - the date you buy or sell a security - rather than the settlement date as the date of record.