Settlement

The final step of the chain that begins with execution and passes through clearing. On a listed equity market it is delivery against payment on a stated cycle, counted in business days from the trade date, and the cycle differs by market and has been shortening. In spot foreign exchange the standard value date is two business days after dealing for most pairs and one for a few, which is the convention that gives the market its rolling settlement calendar.

Many instruments never deliver anything. A cash settled contract discharges by paying the difference between the agreed price and a reference price, which is how index futures, most index options and every contract for difference conclude. In those cases the settlement price is itself a defined calculation, commonly an auction price or an average over a stated window, and the definition sits in the contract specification rather than in the market's last trade.

The three moments are routinely used as if they were one, and separating them explains several things at once. Execution is agreeing a price, clearing is establishing and guaranteeing who owes what, and settlement is the money moving. The date on which settlement is due is the value date, and it is the reason financing on a rolled spot position is charged for three days on one weekday of the week: the value date being rolled that day lands after the weekend.