Series 7 practice questioneasyTrade Settlement — Municipal Bonds
A customer purchases a municipal bond on Thursday. Under regular way settlement, when does the trade settle?
- AFriday (T+1)✓ Correct answer
- BThe following Monday (T+2)
- CThursday (same day)
- DThe following Wednesday (T+3, skipping the weekend)
Explanation
Why A — Friday (T+1)
Municipal bonds settle on a regular way T+1 basis, the same as corporate securities. A trade executed on Thursday would settle on Friday, one business day later. Weekends and market holidays are not counted as business days for settlement purposes. The T+1 settlement cycle applies to most securities including equities, corporate bonds, and municipal securities.
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