How does settlement work for US shares?

What is 'settlement'?

When you buy or sell shares, you enter into a contract to exchange shares for an agreed value with another party. The actual transfer of stocks and cash is known as 'settlement' and will take place at a later time after the order is processed.

All US markets available through SelfWealth use 'T+1 settlement' from 28th May 2024. This means that when you buy shares, the 'settlement' of that transaction takes place 1 trading days after the order is filled.

Do I need to have funds available when placing a 'buy' order?

You must have the total cash value inclusive of any brokerage costs in your cash balance in order to place an order for an International stock.

Example:

You wish to buy 5 units of Apple (AAPL) for $170.00 per unit. Based on the below order submission the total value of the order is $859.50. Once $9.50 brokerage is accounted for, the USD cash balance needs to be $852.00 for the order to be placed.

How does settlement work when selling shares?

Brokerage is deducted from the sale proceeds of any stock you sell on international markets, along with any selling fees from the exchange as indicated on the contract note. You will receive the sale proceeds after settlement.

Example:

You sell your shares on a Tuesday. The trade will settle on the next trading day, which is Wednesday (assuming there are no public holidays during that week).

After settlement, you must also allow 1 extra business day for the funds to arrive in your cash account. You can then withdraw your funds on Friday.

Can I trade on my unsettled international funds?

Yes, you can use proceeds from your recent sales on International stocks to buy additional stocks in the same International market. For example, if you sold a US Stock, you can use those funds immediately to buy another US Stock, but you cannot use those funds to buy a Hong Kong or Australian stock until settlement has been reached and a cash transfer has been completed to the relevant currency.