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Same Day Funds Settlement (SDFS) |
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Same Day Funds Settlement (SDFS)A method of settlement used in trading between well-collateralized parties in good-the-same-day federal funds used by the Depository Trust Company for transactions in US government securities, short-term municipal notes, medium-term commercial paper notes, CMOs, and other instruments.Same Day Funds Settlement (SDFS) Similar MatchesSettlement priceSettlement priceA figure determined by the closing range that is used to calculate gains and losses in futures market accounts. Settlement prices are used to determine gains, losses, margin calls, and invoice prices for deliveries. Related: Closing range. Insurance settlementInsurance settlementThe payment of proceeds by an insurance company to the insured to settle an insurance claim within the guidelines stipulated in the insurance policy. SettlementSettlementSettlement is what happens after your broker has bought or sold shares on your behalf. There are three aspects to it:Transfer of ownershipIf you have a nominee account with your broker, the shares you buy or sell are registered in the broker's name, and responsibility for sorting out changes of ownership rests with the broker and the registrar.If you have a certificated account, and you have sold shares, you have to send the share certificate(s) to the broker so that settlement can be effected. If you have bought shares, you will receive a share certificate from the company's registrar either direct or vis your broker.Payment when you buy sharesShare purchases have to be paid for. If your broker works on a 'cleared funds' basis, you will have to have enough money in your broker account to pay for the shares and transaction costs before you buy them. If you haven't got the money available, the broker's system will spot the deficit, and will not process the order.For offline trading, your ability to buy 'on credit' will depend on the kind of relationship you have with your broker. If you have £300 in your account and want to buy £12,000 of shares, eyebrows will be raised and you may be asked to deposit money with the broker before the order is processed.Once a broker has bought shares on your behalf, you have an obligation to supply him with funds prior to the settlement date. Most brokers will accept cheques, direct bank transfers, and debit cards. It is important to check how your broker accepts payment beforehand.Receipt of proceeds when you sell sharesWhen you sell shares, the broker will credit funds to your client account after deducting commission. It is then up to you to decide what to do with that money. You can ask your broker to send the money to your normal bank account, or you can reinvest it in the market, or you can leave it in the client account where it will earn interest.The timing of payment will depend on the settlement time of your transaction. The industry standard used to be T+5 but this changed to T+3 in February 2001. The '5' and '3' simply indicate the number of working days after the transaction date by which settlement must be complete. SettlementSettlementWhen payment is made for a trade. Cash settlement contractsCash settlement contractsFutures contracts such as stock index futures that settle for cash and do not involve delivery of the underlying. Further SuggestionsDispute settlementsettlement options Exchange Delivery Settlement Price Uniform Settlement Statement Settlement risk Bank for International Settlements (BIS) Good delivery and settlement procedures Settlement rate Structured settlement cash settlement Skip day settlement Dispute Settlement Body Next day settlement Bank for International Settlements Settlement options Exercise settlement amount Regular way settlement Cash Settlement Cash sale or settlement Regular settlement Settlement date Continuous net settlement (CNS) Immediate settlement Real Estate Settlement Procedures Act (RESPA) Short settlement |
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