T+3

In financial markets T+3 is a shorthand for trade date plus three days indicating when securities transactions must be settled. T+3 means that when a security is purchased, payment and the must change hands no later than three business days after the trade is executed.

During the 1700s the had close links with the and they would often list each other's stocks. To clear the trades, time was required for the physical stock certificate or cash to move from Amsterdam to London and back. This led to standard settlement period of 14 days which was the time it usually took for a courier to make the journey on horseback and by ship. Most exchanges continued to use the same model over the next few hundred years. With the advent of new technology in the 1970s and 1980s there was a move to reduce settlement times, and settlement dates in most exchanges reduced to five days (known as T+5) then down to three days (known as T+3 or Trade date plus three days).

Efforts are also underway in Europe to shorten the settlement cycle for stocks to two days ("T+2"), driven by the European Commission's Central Securities Depositories Regulation. Discussions have begun in the United States to follow suit, propelled in part by cost-benefit analysis research commissioned by the Depository Trust & Clearing Corporation in 2012. The study, conducted by the Boston Consulting Group, identified 11 key enablers to achieving shortened settlement cycles, including the establishment of a "trade date" environment, or a market where same-day affirmation (SDA) is the norm.

The three-day settlement date applies to most security transactions, including , bonds, municipal securities, mutual funds traded through a brokerage firm, and limited partnerships that trade on an .

In contrast to T+3, government securities, , and options on futures contracts settle on the next business day following the trade. Futures contracts themselves settle the day of the trade.

...
Wikipedia