Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

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Regulation T payment occurs how many business days after trade date?

plus 2 business days
plus 3 business days
plus 4 business days
plus 5 business days

The correct answer is: plus 4 business days

Regulation T requires that payment for securities must be received within a specific timeframe to ensure that transactions are settled properly. The timeframe for Regulation T payment is three business days after the trade date, which is often referred to in practice as "T+3." This means that if a trade occurs on a Monday, the payment would need to be made by Thursday of that week, allowing for three full business days for the settlement process. It's important to note that although the first two business days after the trade date may be used for processing transactions, the overall requirement is to have payment made within three business days. Thus, the correct understanding of Regulation T is that payment must occur on the third business day following the execution of the trade, marking a clear distinction in the trading and settlement process in the securities industry.