What does T + 1 indicate in the context of Treasury securities?

What does T + 1 indicate in the context of Treasury securities?

• A. Trade plus one business day
• B. Trade the day before
• C. Trade plus three business days
• D. Trade the day after

Answer: (A)

T + 1 in the context of Treasury securities refers to the settlement cycle for securities transactions, indicating that the settlement takes place one business day after the trade is executed. This means that if a trade occurs on a Monday, the transaction would settle on Tuesday, with the buyer required to pay for the securities and the seller receiving the securities on that following business day. This quick settlement process is particularly beneficial for Treasury securities, promoting liquidity and efficiency in the market. Other options do not align with the standard settlement practices associated with Treasury securities. For instance, a settlement of "trade the day before" or "trade the day after" does not reflect the actual transaction timeline, while a settlement period of "trade plus three business days" applies to other types of securities but is not applicable to Treasury securities, which prioritize quicker settlement.

T + 1 in the context of Treasury securities refers to the settlement cycle for securities transactions, indicating that the settlement takes place one business day after the trade is executed. This means that if a trade occurs on a Monday, the transaction would settle on Tuesday, with the buyer required to pay for the securities and the seller receiving the securities on that following business day.

This quick settlement process is particularly beneficial for Treasury securities, promoting liquidity and efficiency in the market. Other options do not align with the standard settlement practices associated with Treasury securities. For instance, a settlement of "trade the day before" or "trade the day after" does not reflect the actual transaction timeline, while a settlement period of "trade plus three business days" applies to other types of securities but is not applicable to Treasury securities, which prioritize quicker settlement.