What is Rolling Settlement ?
Rolling Settlement means that trades are settled on a daily basis for a given settlement cycle. Each day is a settlement cycle identified by a unique settlement number within an Exchange for each segment. Trades executed in the normal market in the Capital Market segment are settled on T+2 day (working days) basis where âTâ is the trade date. For e.g. trades executed on Monday are settled on Wednesday, trades executed on Tuesday are settled on Thursday and so on.
Rolling Settlement is a mechanism of settling trades done on a stock exchange on T i.e. trade day plus “X” trading days, where “X” could be 1,2,3,4 or 5 days. In other words, in T+5 environment, a trade done on T day is settled on the 5th working day excluding the T day. In India, until recently, the settlement of majority of trades was done on Account Period basis, where trades done in a trading cycle of 5 days were consolidated, scrip-wise netted and settlement of such netted trades took place on a single day in the following week. Thus, it took anywhere between one to two weeks for the investor, depending upon the day of his transaction, to realize the money for shares sold or get delivery of shares purchased. However, in the Rolling Settlements, trades done on each single day are settled separately from the trades done on earlier or subsequent trading days. The netting of trades is done only for the day and not for multiple days. Initially, the trades in Rolling Settlements, to beg
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