The Settlement Period is the time between the trade date and the settlement date. During this period, various administrative and financial tasks are completed to finalize the transaction and transfer the ownership of the assets involved.In the stock market, the settlement period is typically two business days after the trade date, which is known as T+2 (Trade date + 2 days) in most markets around the world. This means that on the second business day after a trade is made, the funds and securities are exchanged and the ownership of the shares is transferred from the seller to the buyer.In the foreign exchange (forex) market, the settlement period is typically one business day after the trade date, which is known as T+1 (Trade date + 1 day). This means that on the next business day after a trade is made, the currencies are exchanged and the ownership of the currencies is transferred from the seller to the buyer.It's important to note that during the settlement period, both the buyer and the seller are exposed to a certain level of risk, as the trade is not yet fully settled and the ownership of the assets is not yet transferred. This is known as settlement risk and can be managed by various risk management techniques.
