Japan Stock Rules· Lesson 4 of 6· 6 min

T+2 Settlement and the Record Date

Japanese trades settle on the 2nd business day after the trade; to get dividends and shareholder perks, you must hold at the close 2 business days before the record date (the last cum-rights day) at the latest.

This lesson is free: sign up for an account to use the interactive simulation

Every lesson has an interactive simulation you can drag and play, plus a quick quiz. Sign up free to use them and save your progress automatically. Here is the text version of this lesson.

Not sure yet? Try the first lesson (no sign-up needed)「Morning Session, Afternoon Session and Itayose」。

Text version · Japan Stock Rules, lesson 4: “T+2 Settlement and the Record Date”

Settles on the 2nd business day after the trade

Japanese stocks settlement T+2: since July 2019 it has been the 2nd business day after the trade, down from T+3. You can sell on the day you buy (T+0).

The latest day to buy if you want the dividend

To get dividends and shareholder perks you must be registered as a shareholder on the record date. With T+2 settlement, that means holding at the close on the last cum-rights day (2 business days before the record date) at the latest.

“Dividend capture” isn't free money

Buy from the ex-rights day onward and you miss this dividend. The share price usually drops by about the dividend that day, so buying on the last cum-rights day and selling on the ex-rights day often just swaps share price for dividend.

Key takeaways

Japanese trades settle on the 2nd business day after the trade (shortened from T+3 to T+2 in July 2019); shares bought can be sold the same day.
To get dividends and shareholder perks you must be registered as a shareholder on the record date, so you must hold at the close on the last cum-rights day (2 business days before the record date) at the latest.
Buy from the ex-rights day onward and you miss this round; the share price usually drops by about the dividend that day, so “grabbing the dividend” isn't free money.

Try it yourself

You can do these exercises in this lesson's interactive simulation:

Keep the purchase on Friday, March 27 and press ▶: when does it settle? Does it make the record date?
Change the purchase to Monday, March 30: can you still get this dividend? Why?
Switch to “Sell” and pick March 30: are you still entitled to this dividend?

Quiz and explanations

1. The record date is March 31 (Tuesday). What's the last day you can buy to get this dividend?: Answer: March 27 (Friday).Trades settle on the 2nd business day: buy on March 27, settle on March 31, just in time for the record date.
2. You buy on the last cum-rights day and sell the next day (the ex-rights day). Do you get this dividend?: Answer: Yes.All that matters is being registered as a shareholder on the record date; if you sell on the ex-rights day, settlement is after the record date, so you still qualify.
3. What's the settlement cycle for Japanese stocks?: Answer: T+2.Shortened from T+3 to T+2 in July 2019: trades settle on the 2nd business day after the trade.

Terms in this lesson

ex-rights day (Ex-Rights Day): The business day after the last cum-rights day. Buy from this day on and you don't get this dividend or perks, and the share price usually drops by about the dividend.
last cum-rights day (Last Cum-Rights Day): To receive a dividend or shareholder perks, you must buy and still hold at the close on this day at the latest. Japanese stocks settle 2 business days after the trade, so it's 2 business days before the record date.
settlement (Settlement): The step after a trade where cash and shares formally change hands; different markets take different numbers of trading days (US stocks T+1, Hong Kong T+2).
T+0: Shares bought today can be sold the same day. Hong Kong, US, Japanese and Korean stocks all allow it; ordinary A-shares don't, only some ETFs and similar products do.