Cash Settlement vs. Regular-Way Settlement Terms
When a securities trade is executed under 'CASH SETTLEMENT' terms, when must delivery of securities and payment occur?
Cash settlement requires settlement (delivery of securities and cash payment) on the SAME DAY the trade is executed, usually by 2:30 p.m.
Complete Analysis & Legal Rationale
Cash settlement requires settlement (delivery of securities and cash payment) on the SAME DAY the trade is executed, usually by 2:30 p.m. ET. It is used when an investor needs immediate settlement (e.g. to meet record date dividend deadlines).
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Cash settlement settles on the trade date (same day) by 2:30 p.m. ET.
T+1 is regular-way settlement.
T+3 is Reg T final payment date.
Settlement timing is legally fixed by SEC/FINRA rules, not customer discretion.
Official Standard: Governs same-day cash settlement deadlines.