Settlement periods are changing

Settlement periods are changing

The European Union is introducing some new changes to how trades are settled. The changes will affect the way we manage your accounts, so here’s what you need to know.
 
The changes take effect from 6 October 2014. You don’t need to do anything differently, we’re just making sure we keep you up to date.
 

What's changing?

The current settlement period for UK and other European markets is the transaction date plus three business days. You’ll often hear this called ‘T+3’.

Put simply, when you buy in the market you place the deal on the transaction date, then three days later, we take the cash from you and pass the holding to your account. In the same way, if you sell, you place the sale on the transaction date and three days later we take the holding and pay your cash to your account.

From 6 October 2014, the settlement period for many stock exchanges across Europe will move to the transaction date plus two business days, or T+2. The aim is to reduce risk and improve efficiency. This means when you buy or sell your cash and holdings will move one day earlier than they do at the moment.

During the transitional period, two days’ worth of trades will settle on 8 October for any transactions made on both 3 October and 6 October. You’ll need to make sure you have the relevant cash available to cover any purchases you make on these two dates.

The table below shows the settlement dates during the change period:

​Trade Date ​Settlement date
​Thursday 2 October ​Tuesday 7 October (3 Days)
​Friday 3 October ​Wednesday 8 October (3 Days)
Change to settlement
​Monday 6 October ​Wednesday 8 October (2 Days)
​Tuesday 7 October ​Thursday 9 October (2 Days)
​After Wednesday 8 October ​2 days

What does this mean for you?

  • The shortened settlement period simply means you’ll receive cash or holdings a day earlier.
  • It also means that purchases need to be paid for a day earlier, so you’ll need to ensure you have cash available.

 

Markets Moving to T+2

​Date ​Country
​Already T+2 ​Bulgaria ​Germany ​Slovenia
​6 October 2014 ​Austria
Cyprus
Estonia
Greece
Ireland
Lithuania
Netherlands
Portugal
Sweden
​Belgium
Czech Republic
Finland
Hungary
Italy
Luxembourg
Norway
Slovakia
Switzerland
​Croatia
Denmark
France
Iceland
Latvia
Malta
Poland
Spain (Fixed Income)
UK
​Uncertain ​Liechtenstein ​Romania
​January 2015 ​Bosnia & Herzegovina
​November 2015
​Spain (Equities)

Frequently Asked Questions

Q. What is changing?
A. The current settlement period for UK and other European markets is the transaction date plus three business days. You’ll often hear this called ‘T+3’.

Put simply, when you buy in the market you place the deal on the transaction date, then three days later, we take the cash from you and pass the holding to your account. In the same way, if you sell, you place the sale on the transaction date and three days later we take the holding and pay your cash to your account.

Q. Will the changes affect the direct debit linked to my account for shortfalls? 
A. Yes. At the moment, the direct debit for any shortfall is requested on T+1. Due to the shortening of settlement, the direct debit will now be requested on the day of trade. This means you will have to ensure you have the cash in your bank account on the day you place your trade if you think there will be a shortfall in your stockbrokers account, meaning we’ll need to use your direct debit to settle your trade

Q. Will the settlement date change on any certificated trading change?
A. No, certificated trading will be treated as an exception and as such will not change - standard settlement for Certificated will remain T+10.

Q. Will the timescale change in regards to switching stock out of your Stockbrokers Market Master to your Stockbrokers Investment ISA?
A. No, this will remain at T+5 as it is currently

Q. What are the benefits of shorter settlement periods?
A. Market practices will be harmonised across all participating European Markets. Clients will see their trades settle 1 day quicker meaning holdings from a purchse, or cash from a sale earlier.

Please wait …