Stock settlement basics.
When you buy or sell shares on the ASX, the deal doesn’t finish the instant you click the button.The trade is agreed straight away, but the money and shares ahve to be swapped behind the scenes. The process is called settlement.
In Australia the standard is called T+2. The “T” stands for trade date, and the “+2” means two business days later. So if you buy a share on Monday, the ownership is officially transferred to you and the money leaves your account on Wednesday. If you sell on Monday, the cash from the sale will reach your account on Wednesday too.
The timing matters for a few reasons. First, you don’t truly own the shares until settlement, which means many brokers won’t let you sell them again until they are in your name. Second, if you sell, you need to wait until the cash actually arrives before you can use it elsewhere. Thirdly, settlement rules make sure the system is orderly, so both buyers and sellers can trust that trades will be honoured.
In short, settlement is the plumbing that keeps the ASX running smoothly. It ensures money and shares change hands properly, giving investors confidence that every trade is completed fairly and on time.