What are unsettled funds and why am I being warned or restricted from using them?
Under Regulation T of the Securities and Exchange Act of 1934 all transactions in a cash account must be paid for in full and are also subject to settlement rules. If you purchase a security with settled funds in your cash account you may sell that security at any time without restriction. If you purchase a security in your cash account with insufficient funds or unsettled funds you must hold that security until the purchase is fully paid for with either a new deposit or the settlement date is reached for the funds used. Read our Unsettled proceeds sales disclosure here. Stock trades settle 3 business days following the trade date (T+3) and Option trades settle 1 business day following the trade date (T+1). According to this rule, sale proceeds generated by selling stock in a cash account are considered “unsettled” for a period of 3 business days following the trade date. You may re-use the unsettled sale proceeds to purchase another security prior to the settlement date of those funds
