15.6. Cash Settlement and Delivery of Securities

While broker-dealers must settle trades with their clearinghouse by the settlement date, customers of broker-dealers have an additional two business days to settle with their brokers. So, for example, a broker-dealer must settle a customer’s purchase of Treasury securities with the clearinghouse by T + 1, and the customer must settle with the broker-dealer by T + 3. For stock transactions and corporate and municipal bonds, the broker-dealer must settle with the clearinghouse by T + 2 and the customer has through the end of T + 4 to settle with the broker. If a customer does not come up with payment by the fourth business day after a trade, the member firm will close out the position.