What does T+2 settlement mean?
Definition
T+2 settlement means a trade finalizes two business days after the day it is executed: T is the trade date, and the number counts the business days until money actually moves.
The same notation covers the whole ladder: T+0 settles the same day, T+1 the next business day, T+2 the day after that. Spot FX has settled on T+2 by market convention for decades. Business days are the catch: a trade executed Thursday afternoon settles Monday, and one that misses a bank's cut-off time slips another day. Weekends and holidays do not count.
For payment companies the lag is the root cost. Money committed on Monday is not usable in the destination until Wednesday, so payouts in the meantime run on prefunded balances and float accumulates in transit. Stablecoin settlement runs 24/7 and finalizes in minutes, which makes it effectively T+0 with no cut-off times. On Codex FX, the fastest trades settle in under 30 minutes and most complete the same day.
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