Understanding Settlement Terms

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What are Settlement Terms?

Settlement terms define when the exchange of securities and cash occurs after a trade is executed. The Argentine market offers three main settlement periods:

• CI (Contado Inmediato): Immediate settlement
• 24hs: Settlement in 24 hours
• 48hs: Settlement in 48 hours

Understanding these terms is crucial for effective arbitrage and portfolio management.

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Settlement Term Details

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CI - Contado Inmediato (Immediate Settlement)

How CI Settlement Works

Settlement timing: Same trading dayWhen you execute a trade in CI:

• Buy operation: Cash is debited immediately and securities are credited to your account
• Sell operation: Securities are debited immediately and cash is credited to your account

Key characteristics:

• Requires immediate availability of cash (for buys) or securities (for sells)
• No financing period
• Ideal for same-day liquidity needs
• Often used as the “spot” reference price

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24hs Settlement

How 24hs Settlement Works

Settlement timing: One business day after trade executionWhen you execute a trade in 24hs:

• Buy operation: You have until T+1 to have the cash available
• Sell operation: You receive the cash on T+1

Key characteristics:

• Most common settlement term in the Argentine market
• Provides one day of “financing”
• Allows time to arrange funds or securities
• Often offers different pricing than CI due to implicit financing cost

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48hs Settlement

How 48hs Settlement Works

Settlement timing: Two business days after trade executionWhen you execute a trade in 48hs:

• Buy operation: You have until T+2 to have the cash available
• Sell operation: You receive the cash on T+2

Key characteristics:

• Longest standard settlement period
• Provides maximum financing flexibility
• Price differences from CI/24hs can be more pronounced
• Less liquid than CI and 24hs for many instruments

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Why Do Prices Differ Across Settlement Terms?

The same asset can trade at different prices across settlement terms due to:

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1. Implicit Financing Cost

Longer settlement terms provide implicit financing. The price difference reflects:

• Time value of money
• Interest rate environment
• Repo (cauciones) rates

Example:

• NVDA CI: $50,000
• NVDA 24hs: $49,800
• The $200 difference represents the implicit 1-day financing cost

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2. Supply and Demand Imbalances

Different market participants have varying needs:

• Some need immediate liquidity (prefer CI)
• Others seek financing (prefer 24hs/48hs)
• This creates temporary price dislocations

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3. Market Efficiency Gaps

Arbitrage opportunities exist when:

• Price differences exceed the actual cost of financing
• Market participants aren’t actively arbitraging
• Temporary liquidity constraints in one settlement term

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Practical Trading Scenarios

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Scenario 1: You Need Cash Today

Situation: You own 100 shares of GGAL and need cash immediately Solution: Sell in CI settlement

• Immediate cash receipt
• Can place proceeds in cauciones if not needed immediately
• Avoid waiting 24 or 48 hours for settlement

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Scenario 2: You Want to Buy But Don’t Have Cash Today

Situation: You want to buy 100 shares of YPF but cash arrives tomorrow Solution: Buy in 24hs settlement

• Execute the trade today at today’s price
• Cash payment deferred until tomorrow
• Avoid missing the entry price while waiting for funds

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Scenario 3: Arbitrage Opportunity Detected

Situation: ChuchoBot shows NVDA CI selling higher than NVDA 24hs Solution: Execute arbitrage strategy

1. Sell NVDA in CI (receive cash today)
2. Buy NVDA in 24hs (pay tomorrow)
3. Place CI proceeds in cauciones
4. Capture the spread plus repo interest

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Settlement Terms and Cauciones

Cauciones (repos) are essential for settlement arbitrage:

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Cauciones Colocadora (Lending Cash)

When to Use Cauciones Colocadora

Use when: You have excess cash from a CI sale and the buy settlement is laterBenefits:

• Earn interest on idle cash
• Enhances arbitrage profitability
• Risk-free return while waiting for buy settlement

Configuration in ChuchoBot:

• Set “Comisión Colocadora (TNA)” in the arbitrage scanner
• This affects P&L calculations

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Cauciones Tomadora (Borrowing Cash)

When to Use Cauciones Tomadora

Use when: You buy in CI but sell in a later settlement termBenefits:

• Enables arbitrage without upfront capital
• Bridges the cash flow timing gap
• Cost is offset by the arbitrage spread

Configuration in ChuchoBot:

• Set “Comisión Tomadora (TNA)” in the arbitrage scanner
• Higher borrowing costs reduce net arbitrage profit

Important: Ensure you have borrowing capacity with your broker

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Market Hours and Settlement Terms

ChuchoBot tracks different market hours:

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General Market Hours

• Opening: 10:30 AM (default)
• Close without auction: 17:00 PM (default)
• Close with auction: 16:57 PM (default)

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CI Market Hours

• Opening: 10:30 AM (default)
• Close without auction: 17:00 PM (default)
• Close with auction: 16:57 PM (default)

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Settlement Terms in Scanner Display

ChuchoBot’s arbitrage scanner displays settlement terms clearly: Format: 1 Sell INSTRUMENT - TERM / 2 Buy INSTRUMENT - TERM Examples:

• 1 Sell NVDA - CI / 2 Buy NVDA - 24hs (you need to own NVDA)
• 1 Sell SPY - 24hs / 2 Buy SPY - CI (you need cash or borrowing capacity)

Reading the Display:

• Left side (1 Sell): The first operation you execute
• Right side (2 Buy): The second operation you execute
• Settlement term order: Determines which strategy type to use

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Best Practices

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Common Questions

Can I trade all instruments in all settlement terms?

Most instruments are available in CI and 24hs. Not all instruments trade in 48hs. Check ChuchoBot’s real-time data for availability.

What happens if I don't have cash/securities at settlement?

Your broker will typically:

• For buy: Automatically arrange financing (with associated costs)
• For sell: You cannot execute without securities unless using short-selling (if available)

Always ensure you have sufficient cash or securities for settlement.

Can settlement dates fall on weekends or holidays?

Settlement dates are business days only. If T+1 or T+2 falls on a weekend or holiday, settlement moves to the next business day.

Why does ChuchoBot sometimes show negative P&L for settlement arbitrage?

When the price spread is smaller than the total cost of:

• Trading commissions (buy + sell)
• Market fees
• Repo borrowing/lending rates

The arbitrage is not profitable. ChuchoBot’s scanner helps you identify only positive opportunities when you enable the profit filter.

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