U.S. stock market settlement runs on a T+1 cycle: a trade executed today settles the next business day, when ownership and cash actually change hands. The Securities and Exchange Commission’s rule shortening settlement from two business days to one took effect on May 28, 2024, and governs stock trades through 2026. Buy shares on a Monday, payment is due by Tuesday’s settlement close. Sell on Friday, the proceeds land the following Monday. Trade the day before a market holiday, and settlement moves to the first business day after the holiday.
What T+1 Actually Covers
Settlement is the moment ownership of a security transfers and cash moves between buyer and seller. Under T+1, that exchange happens one business day after execution.
The cycle applies to stocks, corporate and municipal bonds, exchange-traded funds, certain mutual funds, real estate investment trusts, and master-limited partnerships traded on U.S. exchanges. U.S. Treasury securities and many money market instruments were already settling on a T+1 or same-day basis, so they were largely unaffected by the 2024 change. Mutual funds and some fixed-income securities can still settle on T+1, T+2, or T+3 depending on the fund. IPOs priced before 4:30 p.m. ET settle one business day after the underwriting agreement is signed; those priced after 4:30 p.m. ET are permitted two business days.
2026 Market Holidays That Shift Settlement
Settlement counts only business days when the market is open. Weekends and holidays are skipped, so a trade placed on the last open day before a closure settles on the first open day after it. The New York Stock Exchange and Nasdaq are fully closed on these 2026 dates:
- January 1 — New Year’s Day
- January 19 — Martin Luther King Jr. Day
- February 16 — Presidents’ Day
- April 3 — Good Friday
- May 25 — Memorial Day
- June 19 — Juneteenth
- July 3 — Independence Day (observed)
- September 7 — Labor Day
- November 26 — Thanksgiving Day
- December 25 — Christmas Day
Exchanges close early, at 1:00 p.m. ET, on the day after Thanksgiving (November 27) and on Christmas Eve (December 24). Trades placed on an early-close day still follow standard T+1 rules and settle the next business day. SIFMA’s recommended bond market schedule adds early closes such as May 22 before Memorial Day and July 2 before Independence Day, though SIFMA has noted that early close recommendations do not affect settlement closing times.
For anyone trading across the U.S.-Canada border, the Canadian depository (CDS) keeps a separate but overlapping calendar. On U.S.-only holidays like Martin Luther King Jr. Day, CDS operates for Canadian-dollar settlement only. On Canadian-only holidays like Victoria Day (May 18), it processes U.S.-dollar settlement only. Shared closures like Labour Day on September 7 and Christmas shut down both currencies.
What T+1 Means for Your Trades
The most direct effect is that sale proceeds reach your account a day sooner than they did under T+2. Sell Monday, cash is available Tuesday. The tradeoff runs the other way for buyers: funds must be in place a day earlier, and the window for cost-basis adjustments at tax time shrank from two business days to one.
If you use money market fund proceeds to cover a stock purchase, you need to sell the money market fund by 4:00 p.m. ET on trade day so the cash arrives in time for T+1 settlement. Margin account provisions can also tighten under the shorter cycle. Physical securities certificates, though uncommon, must be delivered to a broker a day earlier than before.
Dividend timing changed as well. Because settlement determines when someone becomes a shareholder of record, the ex-date and record date now fall on the same day. A trade has to settle before the record date for the buyer to qualify for the dividend.
How the Shorter Cycle Has Held Up
Early concern that T+1 would trigger a wave of settlement failures did not play out. On the first day under the new rule, May 29, 2024, the DTCC reported a CNS fail rate of 1.90 percent, compared with a May average of 2.01 percent under T+2. Non-CNS fails came in at 2.92 percent versus a T+2 average of 3.24 percent. By July 2024, average fail rates had settled at 2.12 percent for CNS and 3.31 percent for non-CNS transactions, both in line with historical T+2 levels.
Trade affirmation improved sharply. By the end of May 2024, 94.55 percent of transactions were affirmed by the 9:00 p.m. ET trade-day deadline, up from 73 percent in January 2024. Prime broker affirmation reached 98.6 percent, and auto-matched investment manager transactions hit 97.5 percent.
Clearing costs dropped. The NSCC Clearing Fund fell to $9.1 billion in the first days of T+1, a 29 percent decrease from the prior quarter’s average of $12.8 billion under T+2. By September 2024, the fund had averaged $9.8 billion, roughly 23 percent lower than before the transition. Lower clearing fund requirements free up capital that brokers can deploy elsewhere.
How Settlement Got to One Day
The U.S. cycle has compressed steadily. Before 1993, the standard was T+5, a full business week between trade and settlement. The SEC established T+3 that year. In September 2017, the cycle shortened to T+2, a move supported by SIFMA, the Investment Company Institute, and the DTCC. Each step followed the same logic: less time between trade and settlement means less credit, market, and liquidity risk while the transaction is open.
The push for T+1 gained urgency after the GameStop trading episode of January 2021, when volatile prices produced enormous collateral calls on brokerages and led firms including Robinhood, Interactive Brokers, and TD Ameritrade to restrict purchases in affected stocks. The SEC identified the settlement cycle as one of four reform areas in its staff report, adopted the T+1 rule on February 15, 2023, and set a compliance date of May 28, 2024.
Where the Rest of the World Stands
Canada and Mexico moved to T+1 alongside the U.S. in May 2024. India had already phased in T+1 across all listed securities by January 2023 and introduced optional same-day settlement in March 2024. Pakistan transitioned on February 9, 2026. Nigeria is scheduled for June 1, 2026, covering equities and commodities but excluding fixed income.
The European Union, the United Kingdom, and Switzerland have set a coordinated transition for October 11, 2027. Hong Kong Exchanges and Clearing published a consultation paper in April 2026 with an indicative Q4 2027 target. Chile, Colombia, and Peru have confirmed Q2 2027; Brazil is aiming for February 2028; South Korea is targeting early 2028; Australia does not expect to move before 2030. HKEX estimates that by the end of 2027, roughly 88 percent of global cash equity trading by value will operate on T+1 or faster.
Is T+0 Coming Next?
Same-day settlement is a live discussion, not a current rule. The SEC has identified three possible pathways: netted settlement at the end of the trade day on a T+0 basis, real-time gross settlement without netting, and rolling settlement at intervals during the day. The industry evaluated T+0 during the T+1 planning process and concluded it was not yet achievable. The DTCC’s 2021 report found that same-day settlement would require a comprehensive overhaul of clearance infrastructure, could increase settlement failures, and would demand fundamental changes to funding and global market connectivity. No formal SEC proposal or target date for T+0 exists. For 2026, T+1 is the rule.