Hi @A11! Let’s go through the specifics.
I believe this is the easiest way to remember regular way settlement timeframes:
- US Government securities - T+1
- Trading options - T+1
- Exercising* non-equity options - T+1
- All others - T+2
*An exercise of an equity option is subject to a T+2 settlement. Remember, exercising stock (equity) options results in the purchase or sale of common stock. Therefore, the settlement becomes the normal settlement for stock - T+2. Exercising any other type of option results in the delivery or receipt of cash, subject to a T+1 settlement.
The ex-dividend day for stocks is one business day prior to the record day (not two). Remember, the record date is the day an investor must be an owner of settled stock to receive the dividend. For example, let’s assume Friday, September 24th is the record date for a cash dividend. To receive the dividend, the investor must purchase the stock by Wednesday, September 22nd (T+2 settlement means it will settle on Friday, the record date). This is the last date the stock could be purchased if the investor wanted to receive the dividend. Thursday, September 23rd would be the ex-date, which is the first date the stock would be purchased and the dividend would not be received. If purchased on Thursday, settlement won’t happen until Monday, one day too late.
For accrued interest, you have it backwards.
- Corporate / municipal = 30/360
- US Government = Actual / 365
I hope this helps! Please let me know if you have any questions.