Is TRAD mandatory in an MT540?

The SETR indicator is mandatory in sequence E of MT540 to MT543; TRAD is only its most common value. Every instruction carries exactly one SETR code, and TRAD is the one for a normal buy or sell.

What is the difference between TRAD and TURN?

TRAD settles a single purchase or sale. TURN marks a turnaround: the same security is bought and sold for settlement on the same day through different brokers, and the receipt and the delivery are linked so the securities received can be delivered on.

Does SETR//TRAD have to match my counterparty’s instruction?

Not in T2S, where the transaction type is not among the mandatory, additional or optional matching fields. Some markets do match on it, for example KDPW in Poland according to Clearstream, so agree the code with your counterparty there.

Settlement transaction types

TRAD: Trade

Written and maintained by ZagTrader. Last reviewed 21 October 2026. How this page is sourced and checked

TRAD tells the account servicer that the instruction settles an ordinary purchase or sale of securities. It is the default and by far the most common value of the mandatory SETR indicator in settlement instructions.

Code: TRAD

What TRAD means

Every MT540 to MT543 settlement instruction has to say what kind of business sits behind the securities movement, and TRAD is the answer for an outright trade: a buy or a sell agreed on an exchange, a trading venue or over the counter, settling once with no agreed return leg. The investment manager, broker or custodian client who instructs the receipt or delivery uses TRAD whether the trade settles against payment (MT541, MT543) or free of payment (MT540, MT542).

TRAD is not the right code for everything that moves securities. A repo leg is REPU or RVPO, a stock loan is SECL or SECB, a collateral transfer is COLI or COLO, and a move between accounts with no trade behind it is OWNI, OWNE or PORT. A same-day buy and sell of the same line through different brokers is TURN, and a trade netted against an earlier one is PAIR.

Because TRAD is the default, custodians and back-office systems often fill it in when nothing else is given. Citi’s field 22F guide calls it the default because it is the most common settlement, and Clearstream applies TRAD to Polish (KDPW) instructions unless the client sends another value.

When you see it

In almost every MT540 to MT543 for a client buy or sell, and in the matching MT544 to MT547 confirmations.
In MT548 status advices and in the MT536 and MT537 statements, which repeat the type that was instructed.
As the value a custodian assumes when an instruction reaches it through a channel that does not carry a type.

What to do next

Use TRAD only when the instruction settles a purchase or sale. If the movement is a leg of a repo, a loan, a collateral transfer or an account transfer, pick the specific code. Under EU CSDR, CSDs report settlement fails per type of transaction (purchase or sale, collateral management, securities lending and borrowing, repo, other), and custodians such as BNY pass the instructed SETR code to the CSD for that reporting. A financing or collateral movement sent as TRAD lands in the wrong bucket.
In T2S markets the transaction type is not one of the matching fields, so the code on your instruction does not stop it matching. Some markets do match on it: Clearstream states that for KDPW (Poland) the SETR indicator is a mandatory matching criterion. There, agree the code with your counterparty, or both instructions stay unmatched with reason SETR (see unmatched settlement instructions).
If the account servicer answers with REJT or REPR and reason SETR, the code was missing, unknown or not accepted in that market. Some custodians support only part of the list per market (Citi publishes its supported codes region by region), and BNY says it may change an instructed type into one the market accepts. See the securities settlement lifecycle guide for where the code travels from instruction to confirmation.

Where it appears in MT and ISO 20022

MT (ISO 15022)

MT540, MT541, MT542 and MT543: sequence E (SETDET), field 22F, :22F::SETR//TRAD. The SETR qualifier is mandatory, so every instruction carries one code (format :4!c/[8c]/4!c; with a data source scheme a proprietary code may be sent instead).
Repeated in the confirmations MT544, MT545, MT546 and MT547 (sequence E, :22F::SETR//TRAD) and in the MT548 status advice (sequence B, where SETR is mandatory when the sequence is present).
Optional in the statements: MT536 subsequence B1a2 and MT537 subsequences B2b and C2.

MX (ISO 20022)

sese.023: SttlmParams/SctiesTxTp/Cd = TRAD (code list SecuritiesTransactionType23Code, unchanged in sese.023.001.09 to .013). SttlmParams/SctiesTxTp/Prtry carries a proprietary code instead.
Echoed in sese.024 at TxDtls/SttlmParams/SctiesTxTp/Cd and in sese.025 at SttlmParams/SctiesTxTp/Cd.

Questions

Is TRAD mandatory in an MT540?: The SETR indicator is mandatory in sequence E of MT540 to MT543; TRAD is only its most common value. Every instruction carries exactly one SETR code, and TRAD is the one for a normal buy or sell.
What is the difference between TRAD and TURN?: TRAD settles a single purchase or sale. TURN marks a turnaround: the same security is bought and sold for settlement on the same day through different brokers, and the receipt and the delivery are linked so the securities received can be delivered on.
Does SETR//TRAD have to match my counterparty’s instruction?: Not in T2S, where the transaction type is not among the mandatory, additional or optional matching fields. Some markets do match on it, for example KDPW in Poland according to Clearstream, so agree the code with your counterparty there.