Fidelity Settlement Time
Did you notice that when you execute a trade for a stock or mutual fund that there is something
known as the settlement date that appears on your trade confirmation? If the trade you have done
is a sale, the cash received from that trade cannot be used until the settlement date. This is something you will want to keep in mind: you do not try to use these funds for another trade or withdraw them before you are able to.
How Long Does it Take to Settle Cash at Fidelity?
It takes one business day to settle funds from stock trades at Fidelity. One day is also required to settle options trades.
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History of the Settlement Date
To define it in simple terms, the settlement of a trade is when the money for securities is transferred between two parties. Before the computer age and the current modern era, it might take days or even weeks for a particular trade to settle. With the methods of transportation back then, as well as hand written securities, they could not do it any faster.
In the latter part of the 20th century, as technology rapidly advanced and became more commonplace, things started to shift. At first settlement times lowered to seven days, and then a little later, five days, and then even three days.
In the fall of 2017, because of the continued efficiency and increased of use of technology, the United States reduced settlement periods to just two days. The pace of transactions was being significantly upgraded, and by reducing the settlement time they were also lowering the risk throughout the entire financial system.
Nomenclature
In the US, we denote the settlement date as T+1. In this case, the T represents the date that the trade
was made, and the +1 stands for 1 business day additional time. It should be noted that these are only
business days, and would therefore not include bank holidays, or days the stock market is closed, like
weekends. The old systems that were used could be denoted as T+3, T+5, etc.
Updated on 1/1/2025.
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