Unsettled funds in your account indicate that the proceeds from a recent sale of securities have not yet completed the settlement process. This is a common occurrence in securities trading and is typically the result of the Securities and Exchange Commission (SEC) mandated settlement periods.
- Understanding Settlement Periods: Settlement periods are intervals allowed by the SEC for buyers and sellers to physically exchange their respective halves of a trade. During this time, the proceeds from selling a security are considered unsettled funds. For instance, if you sold stock on Monday, the trade would be settled on Tuesday, and the proceeds would then become settled funds1.
- Current Status: As of May 28, 2024, stocks have a one-business-day (T+1) settlement period1. This means that if you sold a stock, the proceeds would be considered unsettled for one business day after the trade date.
- Using Unsettled Funds: Despite being unsettled, you can use the proceeds from a sale immediately to make another purchase in a cash account, as long as the proceeds do not result from a day trade1. However, you cannot use unsettled funds to purchase non-cash items or to make additional day trades.
- Settled Funds: After the settlement period has ended, the proceeds from the sale become settled funds, at which point you can use them freely in your account1.
In summary, your unsettled funds are the result of the standard settlement period for securities trading, and you can use them for additional purchases once the settlement process is complete.
9/17/2024 08:35pm
