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Upon assignment of the exercise notice, the writer of the index option has the obligation to pay a cash amount. Settlement and the resulting transfer of cash generally occur on the next business day after exercise.

This settlement cycle is known as "T+2," shorthand for "trade date plus two days." T+2 means that when you buy a security, your payment must be received by your brokerage firm no later than two business days after the trade is executed.

When trading Equity Index futures, there are two types of settlement: daily and final. Daily settlement refers to the contract's settlement price on a daily basis while final settlement represents the final value of the contract at expiration.

Most index options are cash settled which simply means that upon exercise cash is exchanged rather than securities. Most equity index options trade European style which means that the option can be exercised only on the date of expiration.

The three-day rule in stocks mandates that buyers and sellers in stock transactions fully settle their business within three days of executing a trade. A buyer must send payment to the brokerage firm involved in a trade within three business days of making a purchase.

In order to clear the transfer of a security from a seller to a buyer, it must go through a settlement process, which creates a delay between the time a trade is made ('T') and when it settles.

The rationale for the delayed settlement is to give time for the seller to get documents to the settlement and for the purchaser to clear the funds required for settlement. T+2 is the standard settlement period for normal trades on a stock exchange, and any other conditions need to be handled on an "off-market" basis.

On February 15, 2023, the Securities and Exchange Commission (the "Commission") adopted a rule amendment to shorten the standard settlement cycle for most routine securities trades from two business days after the trade date to one business day after the trade date (or from "T+2" to "T+1" in common parlance).

Upon assignment of the exercise notice, the writer of the index option has the obligation to pay a cash amount. Settlement and the resulting transfer of cash generally occur on the next business day after exercise.

This settlement cycle is known as "T+2," shorthand for "trade date plus two days." T+2 means that when you buy a security, your payment must be received by your brokerage firm no later than two business days after the trade is executed.

When trading Equity Index futures, there are two types of settlement: daily and final. Daily settlement refers to the contract's settlement price on a daily basis while final settlement represents the final value of the contract at expiration.

Most index options are cash settled which simply means that upon exercise cash is exchanged rather than securities. Most equity index options trade European style which means that the option can be exercised only on the date of expiration.

The three-day rule in stocks mandates that buyers and sellers in stock transactions fully settle their business within three days of executing a trade. A buyer must send payment to the brokerage firm involved in a trade within three business days of making a purchase.

In order to clear the transfer of a security from a seller to a buyer, it must go through a settlement process, which creates a delay between the time a trade is made ('T') and when it settles.

The rationale for the delayed settlement is to give time for the seller to get documents to the settlement and for the purchaser to clear the funds required for settlement. T+2 is the standard settlement period for normal trades on a stock exchange, and any other conditions need to be handled on an "off-market" basis.

On February 15, 2023, the Securities and Exchange Commission (the "Commission") adopted a rule amendment to shorten the standard settlement cycle for most routine securities trades from two business days after the trade date to one business day after the trade date (or from "T+2" to "T+1" in common parlance).