T + 2 Trading Mode – ForTrader.org Financial Magazine


Novice investors are often confused by the description of “trades are held in T + 2 mode” on the stock exchanges. What is T + 2 trading mode and why does an investor need it?

Trading mode T + 2 on the Moscow Exchange

Since 2013, trading on the stock and unit market of the Moscow Exchange has been held in the T + 2 mode.

This is deciphered quite simply: “T + 2” means the second trading day on the exchange from the moment of the transaction with securities.

For example, an investor bought shares in Gazprom on Monday. The purchase itself will be immediately displayed on his trading account, but he will become the full owner of these shares only on the second trading day after their purchase, that is, on Wednesday.

Simply put, the purchase of shares is carried out instantly, but they are transferred to the account in the depository after two trading days.

Why should an investor know about the T + 2 trading mode?

The shareholder of the company is the owner of the share. However, having bought a share, an investor does not become a shareholder immediately, but only after an entry is made on his account with a depository, that is, after the very two days.

This is very important to keep in mind when purchasing shares for the purpose of receiving dividends just before the dividend cut-off. In order to get into the register of shareholders who are entitled to dividend payments, such shares must be purchased at least two days before the dividend cutoff.

For example, an investor on Tuesday bought shares of Norilsk Nickel with the expectation of receiving dividends. Dividends were paid on Wednesday, but the investor did not receive them, since they entered the register of shareholders on Thursday (T + 2), after the dividend cut-off.

The closing dates of the shareholder register can be found on the official websites of the companies or on the website of the Moscow Exchange.

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