After my first stock purchase... settlement date?

[boomstra]

I'm new to investing, just 2 days ago i set up a Scottrade account and just purchased 2 stocks this morning.. now I log on and received the following message:

Trade Date Settlement Date

Symbol Description Net Amount
10/15/2008 10/20/2008 12:00:00 AMxBOUGHT
10/15/2008 10/20/2008 12:00:00 AMxBOUGHT
AGREEMENT

It is agreed between Scottrade, Inc. and the Customer that:
All transactions are subject to the rules and regulations of the US Securities and Exchange Commission, the Federal Reserve Board, the Financial Industry Regulatory Authority, or any Market Center, Clearing Agency, or regulatory authority that may have jurisdiction over this transaction.
All securities carried in a margin account may at any time be hypothecated and commingled with securities carried for the account of other customers and loaned or pledged by Scottrade for a sum not to exceed 140% of the aggregate indebtedness of that margin account.
The Customer agrees to deliver securities sold and payment for securities bought to Scottrade no later than the settlement date. Otherwise, the securities may be bought in or sold out at the discretion of Scottrade. Failure to meet settlement may also result in the cancellation of this transaction or additional charges added to the account. Customer agrees to accept any liability resulting from any failure to complete the transaction. Pending full payment on purchase, securities may be hypothecated and commingled with other securities so purchased until payment is received.
On purchases the name of the seller, and on sales the name of the purchaser, date and time of transaction, as well as any additional remuneration received by Scottrade in connection with this transaction, will be provided upon request.
Should it become apparent that a dividend claim will be forthcoming after the settlement of this transaction, Scottrade reserves the right to withhold the claim amount from any proceeds or amount due.[/quote]

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can someone explain to me what the settlement date indicates? what i'm getting out of this is that I have to sell my stocks within the next 4 days? Someone please shed some light on this..

[CSSVT]

can someone explain to me what the settlement date indicates? what i'm getting out of this is that I have to sell my stocks within the next 4 days? Someone please shed some light on this..

That's the amount of time you have to HOLD the stock if I'm not mistaken. You may sell as of the 20th if i'm reading this correctly.

[aiki14]

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can someone explain to me what the settlement date indicates? what i'm getting out of this is that I have to sell my stocks within the next 4 days? Someone please shed some light on this..

Settlement of stock trades is T+3, which means the money is available as settled funds after hours on the 3rd trading day after your trade. In your example case it would settle on the 20th and be available to be taken out as cash on the 21st. You may be able to purchase stock with the funds prior to settlement but you cannot sell the new stock til the old trade is settled.

Here's the SEC page on the subject:
http://www.sec.gov/answers/tplus3.htm

This is the SEC Brochure on T+3:
ttp://www.sec.gov/investor/pubs/tplus3.htm

[boomstra]

Settlement of stock trades is T+3, which means the money is available as settled funds after hours on the 3rd trading day after your trade. In your example case it would settle on the 20th and be available to be taken out as cash on the 21st. You may be able to purchase stock with the funds prior to settlement but you cannot sell the new stock til the old trade is settled.

Here's the SEC page on the subject:
http://www.sec.gov/answers/tplus3.htm

This is the SEC Brochure on T+3:
ttp://www.sec.gov/investor/pubs/tplus3.htm
let me make sure i get this right..

1. i buy stock on day T0
2. on day T+3, the brokerage will try to withdraw from my account an amount corresponding to the purchase price from transaction 1.. what happens if it's not there?
3. i may not sell this stock until transaction 2 is complete?
4. let's say on T5 i request a sale, does the T+3 settlement rule apply again in this case? ie I will have access to cash resulting from the sale only on T8?

[aiki14]

let me make sure i get this right..

1. i buy stock on day T0
2. on day T+3, the brokerage will try to withdraw from my account an amount corresponding to the purchase price from transaction 1.. what happens if it's not there?
3. i may not sell this stock until transaction 2 is complete?
4. let's say on T5 i request a sale, does the T+3 settlement rule apply again in this case? ie I will have access to cash resulting from the sale only on T8?

You buy a stock on day 0, your broker takes the money out of your acct immediately. The settlement applies to stocks you sell.
You sell a stock on day 0, even though your acct may show the money from the sale in your acct you can't really use it until day 4. Your broker may extend the courtesy of letting you buy a new stock in anticipation of a normal settlement on day 3 but you cannot sell the new stock until day 4. If you do not buy a new stock you would not be able to take out the unsettled funds as cash either until day 4.

[boomstra]

You buy a stock on day 0, your broker takes the money out of your acct immediately. The settlement applies to stocks you sell.
You sell a stock on day 0, even though your acct may show the money from the sale in your acct you can't really use it until day 4. Your broker may extend the courtesy of letting you buy a new stock in anticipation of a normal settlement on day 3 but you cannot sell the new stock until day 4. If you do not buy a new stock you would not be able to take out the unsettled funds as cash either until day 4.
ahhh gotcha. thank you very much for taking the time to explain this :)

[boomstra]

You buy a stock on day 0, your broker takes the money out of your acct immediately. The settlement applies to stocks you sell.
You sell a stock on day 0, even though your acct may show the money from the sale in your acct you can't really use it until day 4. Your broker may extend the courtesy of letting you buy a new stock in anticipation of a normal settlement on day 3 but you cannot sell the new stock until day 4. If you do not buy a new stock you would not be able to take out the unsettled funds as cash either until day 4.
i have scottrade.. do you know if they allow this? i have a regular account (no "trading on margin" option)

[aiki14]

i have scottrade.. do you know if they allow this? i have a regular account (no "trading on margin" option)

I am not familiar with Scottrade, hopefully someone who is will chime in. I'd bet that they will let you do it though.

[Ramza]

I have Scottrade, and that is indeed how it works. If you sell on monday the funds won't settle until thursday. You can Buy, Sell, Buy with the same money on Monday for instance, but you can't sell again until Thursday when the funds settle. Not something I'd really recommend for a market as volatile as this one where things can change on a dime, but if you really want to... :-P