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Settlement rate |
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Settlement rateThe rate suggested in Financial Accounting Standards Board (FASB) 87 for discounting the obligations of a pension plan. The rate at which the pension benefits could be effectively settled if the company sponsoring the pension plan wishes to terminate its pension obligation.Settlement rate Similar MatchesRolling settlementRolling settlementSettlement is the process by which investors pay for shares they have bought and receive payment for shares they have sold. Before July 1994, this process was done by means of an 'account period', normally ten working days. All the transactions during that period were balanced against each other to produce a single figure, which was either paid to the investor or due from him, depending on whether the value of his purchases was higher or lower than the value of his sales in the period. One of the features of the account period was that transactions taking place at the beginning of it (say, Day 1) didn't have to be settled until about 14 days later, whereas transactions at the end (say Day 10) had to be settled within 4 days.In July 1994, the account period system was replaced by ten day (T+10) rolling settlement, which means that each transaction has to be settled ten days after the transaction date. This was subsequently reduced to five days (T+5) and in February 2001 was reduced to three days (T+3).These significance of rolling settlement and of shortened settlement times is that when investors sell shares, the proceeds get paid into their account quicker, and when they buy shares they have to pay for them quicker. It requires careful money management on the part of the investor. Settlement dateSettlement dateThe date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade. For mutual funds, settlement usually occurs in the US the day following the trade. In some regional markets, foreign shares may require months to settle. Continuous net settlement (CNS)Continuous net settlement (CNS)Method of securities clearing and settlement using a clearing house, which matches transactions to securities available, resulting in one net receive or deliver position at the end of the day. Cash settlementCash settlementDeals on an exchange where investors are obliged to settle immediately rather than on account.An expression used in futures and options trading which applies when physical delivery is impractical and contracts are settled by attaching a monetary value. Settlement optionsSettlement optionsThe various options available to the beneficiaries of a life insurance policy in the event of the death of the insured. For example a lump sum or an income. Further SuggestionsShort settlementCash sale or settlement Dispute settlement Regular way settlement Exchange Delivery Settlement Price Dispute Settlement Body Insurance settlement Exercise settlement amount Good delivery and settlement procedures Cash settlement contracts Settlement options Structured settlement settlement day Same Day Funds Settlement (SDFS) Immediate settlement Uniform Settlement Statement Settlement price Cash Settlement Settlement risk Bank for International Settlements (BIS) settlement Settlement Real Estate Settlement Procedures Act (RESPA) Bank for International Settlements Regular settlement |
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