In OEIC settlements, which statement is true?

In OEIC settlements, which statement is true?

• A. They settle on T+1
• B. They settle on T+2
• C. They settle on T+4
• D. They settle on T+0

Answer: (C)

OEICs are unitised funds, so dealing involves issuing or cancelling units and arranging the corresponding cash flows with the fund’s administrator. After a deal is placed, the fund’s NAV is set and the number of units to be created or cancelled is determined at that price, then the actual transfer of cash and units is processed through the fund’s settlement system. This administrative process typically takes several business days, so the standard settlement period is four working days after the trade date (T+4). That longer cycle reflects the fund-wide confirmation and reconciliation steps, which aren’t required to the same extent for many other securities. So the statement that aligns with how OEIC settlements are normally handled is T+4.

OEICs are unitised funds, so dealing involves issuing or cancelling units and arranging the corresponding cash flows with the fund’s administrator. After a deal is placed, the fund’s NAV is set and the number of units to be created or cancelled is determined at that price, then the actual transfer of cash and units is processed through the fund’s settlement system. This administrative process typically takes several business days, so the standard settlement period is four working days after the trade date (T+4). That longer cycle reflects the fund-wide confirmation and reconciliation steps, which aren’t required to the same extent for many other securities. So the statement that aligns with how OEIC settlements are normally handled is T+4.