Series 7 Exam 2022-2023 For Dummies with Online Practice Tests
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For the Series 7 exam, you need to know how to receive trade instructions as well as settlement and payment dates for different securities. Securities that investors purchase have different payment and settlement dates. Here's what you need to know:

  • Trade date: The day the trade is executed. An investor who buys a security owns the security as soon as the trade is executed, whether or not he has paid for the trade.

  • Settlement date: The day the issuer updates its records and the certificates are delivered to the buyer's brokerage firm.

  • Payment date: The day the buyer of the securities must pay for the trade.

Unless the question specifically asks you to follow FINRA or NYSE rules, assume the Fed regular way settlement and payment dates as they appear in the following table. The FINRA and NYSE rules both require payment for securities to be made no later than the settlement date, but the Federal Reserve Board states that the payment date for corporate securities is five business days after the trade date.

Regular Way Settlement and Payment Dates
Type of Security Settlement Date (in Business Days after the Trade Date) Payment Date (in Business Days after the Trade Date)
Stocks and corporate bonds 3 5
Municipal bonds 3 3
U.S. government bonds 1 1
Options 1 5

Cash trades (which are same-day settlements) require payment for the securities and delivery of the securities on the same day as the trade date.

In certain cases, securities may not be able to be delivered as in the preceding chart. In these cases, the seller may specify that there's going to be a delayed delivery. There can also be a mutually agreed upon date in which the buyer and seller agree on a delayed delivery date prior to or at the time of the transaction.

The when, as, and if issued (when-issued transaction) method of delivery is used for a securities issue that has been authorized and sold to investors before the certificates are ready for delivery. This method is typically used for stock splits, new issues of municipal bonds, and Treasury securities (U.S. government securities). The settlement date for when-issued securities can be any of the following:

  • A date to be assigned

  • Three business days after the securities are ready for delivery

  • On the date determined by FINRA

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