Financial Term Explorer
T+1 Settlement
US stocks settle 1 business day after trade execution. Changed from T+2 to T+1 in May 2024, affecting dividend eligibility timing.
📝 Definition
**T+1 Settlement** is the clearing system where stock trades settle (payment and ownership transfer complete) one business day after the Trade date (+1). The US switched from T+2 to T+1 in May 2024. This affects dividend eligibility timing around ex-dividend dates.
In Simple Terms
Buy a stock Monday, it settles Tuesday. To receive dividends, you must buy before the ex-dividend date. Under T+1, buying just one day before ex-date qualifies you. Previously under T+2, you needed two days.
Example
If ex-dividend date is Friday, under T+1 you must buy by Thursday close to receive the dividend. Under the old T+2, you needed to buy by Wednesday.
💡 Practical Tips
- 1Consider T+1 settlement when buying before ex-dividend dates.
- 2Korean stocks still use T+2, so don't confuse the systems.
- 3Check each country's settlement system for international investments.
⚠️ Common Mistakes
Confusing T+1 and T+2 can cause you to miss dividends. Always verify the settlement system for your market.
❓ Frequently Asked Questions
What is Korea's stock settlement?▼
Korean stocks use T+2 settlement. You must buy 2 business days before the record date to receive dividends.