What Is T+2 Settlement in the Stock Market?

“How long after selling shares does the money reach my account?” and “Can I buy new shares straight after selling?” are common questions from new investors. We will answer them in this article.

What is T+2 settlement? When do sale proceeds reach your account?

Under the settlement rules of all three exchanges, HOSE, HNX and UPCoM, the current settlement cycle is T+2: money reaches your account two days after your order is matched. Specifically:

• T+0 is the day the investor’s buy or sell order is matched.
• T+2 is the third day (excluding public holidays, Saturdays and Sundays) counting from the day the shares were sold. On the sell side, the money reaches your account on the afternoon of T+2. On the buy side, the shares reach your account on the afternoon of T+2 after the trading session, so an investor who wants to sell them has to wait until the next session

Example 1:
You sell SSI shares on Thursday (7 April 2022); by Monday morning (11 April 2022) the money is in your account, and you can withdraw it or transfer it from your brokerage account to your bank.

Example 2:
You buy SSI shares on Wednesday (6 April 2022); from Friday afternoon (8 April 2022), after the trading session, you have full use of the shares from your matched order. However, if you want to sell them, you have to wait until the next session, on Monday (11 April 2022)

Because of these particular features of the Vietnamese stock market, investors need to keep the T+ cycle in mind so they do not lose out on entitlements such as dividend rights or price adjustments.

Can you buy other shares straight after selling?

Many investors wonder: if they sell shares on day T, in theory they have to wait until T+2 for the money to arrive before buying again, so can they use the money straight after selling to buy other shares without waiting until T+2?

The answer is yes. Investors can use their sale proceeds from day T0 through the advance on sale proceeds service offered by brokerage firms.

Option 1: Use the cash advance function to buy new shares

Today, almost every brokerage firm offers an advance on sale proceeds via the website or app of the brokerage firm. Each firm charges its own fee and interest rate for the advance period.

Option 2: Use margin, or buy shares through a margin sub-account

At some brokerage firms, to simplify the process for investors, a margin account lets investors buy new shares immediately after selling by default. However, to withdraw cash to a bank account, investors still have to request an advance and transfer the funds. In both cases, investors pay interest for the advance period, depending on the brokerage firm.

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Happy trading!