What are the advantages of Rolling Settlements compared to Weekly Settlements?
Since in the Rolling Settlements, trades are settled earlier than in the Account Period settlement, the settlement risk is lower. The reason for this is that in weekly settlements, the cumulative position built up over various days was consolidated, netted and settled on a single day. This resulted in higher deliveries to be settled for the trades done during the week. Since in Rolling Settlements, trades on a particular day are settled separately from the trades done on any other day, the settlement risk is considerably reduced. Moreover, the sellers and buyers get the monies and securities for their sale and purchase transactions respectively earlier than in Account Period settlements. This also achieves international best practice for settling trades.
