Here’s a Q&A to help you further understand what this change means to you.

What is a securities settlement cycle?

When you buy or sell shares of a security, you contract to exchange the legal ownership of those financial products for money. This exchange is called “settlement.” After a trade executes, the buyer must pay the seller within a specific time frame, and the seller also has a set amount of time to transfer ownership of the security to the buyer. This process, called the “settlement cycle,” involves careful coordination among numerous intermediaries to process the payment and successfully transfer the securities.

Why was the U.S. settlement cycle shortened to T+2?

Generally, the shorter the settlement cycle, the smaller the risk to buyers, sellers (including individual investors), and the markets. During the settlement cycle, there’s a risk that an intermediary representing buyers or sellers may experience financial stress that would make it difficult for that intermediary to fulfill its trade settlement obligations. With the large daily volume of trading in the U.S. financial markets, the change from T+3 to T+2 decreases risk in our financial systems and directly benefits investors and other market participants.

Which U.S. securities are impacted by the settlement cycle change?

The new time frame applies to brokerage securities, including the following:

  • Individual stocks.
  • Individual bonds (corporate and municipal).
  • ETFs (including Vanguard ETFs®).
  • Certain third-party mutual funds.

Were Vanguard mutual funds moved to T+2?

No. Vanguard mutual funds that are bought and sold through Vanguard Brokerage Services® currently have a settlement cycle of T+1 and were not impacted by the change.

How will the shortened settlement cycle affect me?

As outlined above, you’ll 1) receive payment faster following a sale of an exchange-traded security and 2) be required to provide funds more promptly following the purchase of a security.

Were clients of other financial institutions impacted by this change?

All U.S. financial institutions moved to the shorter settlement cycle on September 5.

How does this change compare with settlement cycles in other markets?

Several countries have recently moved their settlement cycles to T+2. The U.S. markets’ move to T+2 creates greater consistency in settlement cycles around the world.


Trade settlement cycle

Most members of the European Union

T+2 – Moved in 2014

Asia and Pacific, including Australia

T+2 or T+1

Canada and Mexico

Moved to T+2 with the United States


All investing is subject to risk, including the possible loss of the money you invest. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

You must buy and sell Vanguard ETF Shares through a broker, who may charge commissions. Vanguard ETF Shares are not redeemable directly with the issuing fund other than in very large aggregations worth millions of dollars. ETFs are subject to market volatility. When buying or selling an ETF, you will pay or receive the current market price, which may be more or less than net asset value.

Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.