What is the regular way settlement period for Treasury bonds?

The correct answer is that the regular way settlement period for Treasury bonds is the next business day, which is known as T + 1. This means that when a transaction for Treasury bonds is executed on a trading day, the actual exchange of the securities and the payment occurs the following business day.

This settlement timeframe is designed to facilitate efficient trading and liquidity in the Treasury market, which is essential for the functioning of government debt instruments. Treasury securities, including bonds, are seen as low-risk and highly liquid assets, thus the shorter settlement period helps maintain that liquidity by ensuring quick turnaround times for transactions.

While other securities, such as corporate stocks and corporate bonds, typically settle in two business days (T + 2), Treasury securities are unique in their quicker settlement. Understanding this key distinction is vital for anyone working in the securities industry, as it impacts cash flow and transaction planning.