The trade settlement period will be shortened to one day beginning May 28, 2024

Starting on May 28, 2024, the settlement period for most securities traded on U.S. exchanges or over the counter will shorten from two business days (T+2) to one business day (T+1). For most investors, this event may have little or no impact. However, there are a few key things to know.

New shortened settlement period reduces risk.
The T+1 settlement period may benefit investors like you by reducing credit and liquidity risks present between the trade date and the settlement date. This is an industry-wide change for most security transactions and types, such as stocks, bonds, municipal securities, exchange-traded products, secondary market CDs, unit investment trusts, and certain mutual funds and limited partnerships that trade on U.S. exchange or over the counter. There will be no change to the settlement period for treasuries, options, or futures as they already use the T+1 settlement period.

Cost basis Implications
After T+1 goes into effect, any changes to your cost basis method will have to be made within one business day of the trade, not two.

Margin interest implications
If you place a trade in a margin account and then need to sell money market funds (“MMFs”) to cover your purchase, the funds will need to be available prior to or on the same day as the trade settlement to avoid being charged margin interest. For trades placed for bonds, equities and other securities, the MMFs will need to be sold by 4 p.m. ET the same day the purchase trade is placed.

To avoid accruing margin interest:
•MMFs will need to be sold by 4 p.m. ET to cover trading in the after-hours market that same day.
•MMFs will need to be sold by 4 p.m. ET to cover purchases of Fixed Income securities that can be traded until 5 p.m. ET the same day.