Someone today said “That might get delayed, like T+1 in the USA” – and it rang a bell with a question on it.
The UK equity market runs on T+3 settlement – we all know that. I’m your average client of a major high-street bank, and use the bank’s broker service to buy a few shares from time to time, on the basis that if anyone is going to mess up my pension plan,
it’s going to be me!. The broker has internet dealing, so I checked up on my target stock, placed my order, and a few seconds later I got the “dealt” message.
Being careful with my hard-earned cash, I opened up the money manager application on my PC and entered the stock purchase, showing that the money would disappear out of my current account in three days – T+3.Three days later – money still there. Four days
– ditto. Fourteen days later the money goes out of my account. What happened to T+3 settlement, I asked myself? But perhaps it was just a one-off technical glitch on the broker’s part.Next time I bought stock – same again – the money went out 14 days later.
Once is chance, twice is coincidence – but before three times happened, I checked my client agreement. Sure enough, there in the small print it says that the settlement period is 14 days.
So I asked the head of equity trading at another major investment bank why this might be. His thoughts? Can’t be, technical glitch, maybe I’ve misread the terms (!?)
Now, call me unduly suspicious if you want, but I get the impression that someone out there is making a profit out of my cash and/or my stock for those missing 11 days.
Can anyone out there explain this 11-day difference between T+3 in the wholesale market and T+14 at the retail end, please?