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Finance GlossaryT-Plus Settlement (T+1)
T-Plus Settlement (T+1)
Definition of T-Plus Settlement (T+1)
T-Plus Settlement is a settlement system in trading. The fund transfer takes place one business day after the trade. For instance, if you buy a stock on Monday, the transaction is completed on Tuesday. The T+1 system reduces risk in settlements and improves liquidity. It ensures that investors can access their money on securities faster.
Related Terms
Mean Absolute Deviation
Mean Absolute Deviation (MAD) is a statistical measure that shows how much the values in a data set differ from the average. It is calculated by taking the average of the absolute differences between each value and the mean.
Red Herring Prospectus
A Red Herring Prospectus (RHP) is a preliminary offer document filed with SEBI when a company plans to go public through an IPO, outlining the company’s business, financials, risks, management, and most issue details. It does not include the final offer price or the exact number of shares being issued. It is marked with a bold red disclaimer indicating that certain key information like price and share count is incomplete or subject to change, and it helps investors assess the company before subscription. Once the offer price and share details are finalised (usually after book-building), the final prospectus with complete priced details is issued for public use.
Non-Cyclical Stocks
Non-Cyclical Stocks are shares of companies whose performance is relatively stable regardless of economic ups and downs. These businesses provide essential goods or services, so demand remains steady even during slow economic periods, making such stocks less volatile than cyclical stocks.
Box Spread
A box spread is a trading strategy that involves buying a bull call spread and a matching bear put spread. The components of a box spread are designed as so:
- Bull call spread : two call options with a lower and upper strike price
- Bear put spread : buying and selling puts at different strike prices of the same underlying asset with the same expiration
Minority Interest
Minority Interest refers to the portion of a subsidiary’s equity that is owned by shareholders other than the parent company. It represents the non-controlling stake in the subsidiary’s profits and net assets. It is shown separately in consolidated financial statements to reflect ownership accurately.
Mean Reversion
Mean Reversion is a market concept that suggests prices can approach back towards their historical average over time. When a stock trades far above or below its usual level, it is expected to gradually return to the mean.
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