- in United States
For most of the year, calendar days, business days and trading days are the same. Then holidays happen and confuse things. What are the different types of days, and why does it matter?
Calendar days are just what they sound like – they include every day on the calendar and are used to compute interest.
Trading days are days on which the relevant stock exchanges are open. In the United States, the New York Stock Exchange and the Nasdaq exchanges observe the same holiday schedule. A half-day of trading is also considered a “good” trading day when calculating a day-count.
Trading days (and business days for that matter) are distinct from days on which EDGAR will be operational and accept filings. EDGAR’s calendar of “good filing days” is available on the SEC website. The SEC will also issue announcements with respect to additional holidays that may occur. It is important to always check for recent announcements because the main calendar is not updated for special holidays.
Business days are days on which banks are open. For most structured products issuers, this will be when banks are open in New York. Foreign bank issuers may also modify the definition of business day to require a “good” business day in both New York and their home jurisdiction. Business days should always be determined based on the relevant central bank calendar. For banks observing New York business days, the relevant publication is the Federal Reserve’s “K.8” calendar.
Settlement days are typically aligned with business days, but they are not always the same. To determine if a day is a “good settlement day,” you will also need to confirm that the relevant settlement system will be open for business in addition to it otherwise being a good business day. DTC announces its holiday schedule at the end of each year for the following year. Some holidays, including Good Friday, for example, are designated as “limited settlement services” days. You should check with your paying agent to determine whether the applicable product will be accepted for initial settlement on any limited settlement services day. It may differ by product type.
What about “federal holidays”? Federal holidays are another calendar and are distinct from these definitions.
Originally published in REVERSEinquiries: Volume 7, Issue 2.
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