T+2 Settlement
Trade Date Plus Two Settlement
A settlement cycle where securities transactions settle two business days after the trade date.
T+2 became the standard settlement cycle for most global securities markets following implementation of shorter settlement cycles from previous T+3 or longer periods. The cycle provides time for trade processing, confirmation, and clearing while reducing settlement risk compared to longer cycles. T+2 requires coordinated processing across multiple parties including executing brokers, clearing firms, custodians, and settlement systems. Market infrastructure must support automated processing, exception handling, and fail management within the compressed timeframe. Many markets are considering further compression to T+1 or same-day settlement as technology improves and operational capabilities advance. T+2 represents a balance between operational feasibility and risk reduction in current market structures.
Example
European equity trades executed Wednesday settle Friday, bond trades typically T+2