Why do stocks take 3 days to settle

The rationale for the delayed settlement is to give time for the seller to get documents to the settlement and for the purchaser to clear the funds required for settlement. T+2 is the standard settlement period for normal trades on a stock exchange, and any other conditions need to be handled on an "off-market" basis.

Why do you have to wait 3 days after selling stock?

However, in order to be a shareholder of record, your purchase of that stock must be settled. In order to ensure that you are an official shareholder by this dividend date, known as the record date, you'll need to actually buy the shares at least three business days prior, before a date known as the "ex-dividend" date.

What is the 3 day rule in stock?

In short, the 3-day rule dictates that following a substantial drop in a stock's share price — typically high single digits or more in terms of percent change — investors should wait 3 days to buy.

Do I have to wait 3 days to sell a stock?

For most stocks, the standard period to receive the proceeds of a stock sale is two days; this is also known as the T+2 settlement period.

Why does it take days to settle a trade?

Clearing validates the availability of proper funds and securities and ensures the delivery of the security and fund to the buyer and seller respectively. If trades are not cleared timely it can result in settlement risk which can further lead to loss of capital and real money.