Fidelity Settlement Time
Did you notice that when you make a trade for a stock or mutual fund, there is something called a settlement date on your trade confirmation? If the trade is a sale, the cash from that trade cannot be used until the settlement date. Keep this in mind so you don’t try to use these funds for another trade or withdraw them before they are available.
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 put it simply, the settlement of a trade is when money for securities is transferred between two parties. Before computers and modern technology, it could take days or even weeks for a trade to settle. With slower transportation and handwritten securities, faster settlement wasn’t possible.
In the latter part of the 20th century, as technology advanced and became widely used, settlement times improved. Initially, settlement times dropped to seven days, then five days, and eventually three days.
In the fall of 2017, with continued advancements in technology, the United States reduced settlement periods to just two days. This faster pace of transactions helped reduce risks across the financial system.
Nomenclature
In the U.S., the settlement date is labeled as T+1. The "T" represents the trade date, and the "+1" means one additional business day. It’s important to note that this only includes business days, excluding bank holidays or days when the stock market is closed, such as weekends. Older systems were labeled as T+3, T+5, and so on.
Updated on 11/26/2024.
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