The settlement cycles of different securities are regulated by the market. They vary from 1 day to 5 days. The settlement cycle includes the period from date of trade to date of delivery and also includes the payment being made within that period. The contracts which are settled within the stipulated time which is regulated by the market are known as regular way contracts. The forward contracts can also be traded through regular way trade by allowing the delivery of the securities of that forward contract to be made within the shortest period of time permitted for that security to be eligible for regular way trade. Normally the regular way trade is followed on the exchanges but there are exceptions to this. The regular way trade security exception is applicable if the regulated marketplace trade settlement mechanism do not exists. There are a number of rules and conditions for a trade to be eligible for the exception.
For Example: Suppose the settlement cycle of a security as regulated by the market is 2 days. If you are to make a regular way trade for the purchase of that security. Then you must pay for the security within the 2 days of the trade and the seller must deliver the security to you within 2 days only.