T+1 is shorthand for “trade date plus one business day” — the convention by which a trade legally settles and the buyer takes ownership one business day after execution. A trade printed on Monday settles Tuesday; a Friday print settles Monday. In practice, that means the cash and shares change hands one calendar day later, with weekends and holidays skipped.
US equity markets moved from T+2 to T+1 in May 2024. The move covered stocks, ETFs, corporate bonds, and most exchange-traded products. Spot crypto ETFs have settled T+1 since launch in January 2024, meaning the convention applied to them from day one.
T+1 matters for ETF flow watchers because creation and redemption activity follows the same convention. When an authorized participant creates ETF shares on Monday, the cash-or-basket leg settles Tuesday and the issuer’s daily flow feed reflects the activity in Tuesday’s post-close report. So “Monday’s net flow” on any ETF dashboard is actually a number written Tuesday morning, after settlement.
The shorter cycle also reduces counterparty exposure. Under T+2, a buyer was on the hook for two days of price movement before owning the shares. T+1 cuts that window in half, reducing the margin and capital that clearing firms have to post against open trades. Operationally, it forces faster post-trade processing — corrections, allocations, and exception handling all have to run inside one calendar day rather than two.