abhishreshthaa
Abhijeet S
ROLLING SETTLEMENT
- ROLLING SETTLEMENT was first ever introduced in India by OTCEI
- It is the process of settling security trades on successive dates so that trades executed today will have a settlement date one business day later than trades executed yesterday.
- This contrasts with account settlement, in which all trades are settled once in a set period of days, regardless of when the trade took place
- All trades executed on a trading day are settled “X” days later
- “T+X” is called rolling settlement where T is trade date and X is the no. of business days after trade date on which settlement takes place.
- Securities that are sold in the secondary market typically settle three business days after the initial trade date.
- Within a portfolio, if some stocks are sold on Wednesday, they will settle the following Monday.
- Stocks in that same portfolio that are sold on Thursday will settle on the following Tuesday.
- Finally, if some of the stocks are sold on Friday, they will settle the following Wednesday.
- When securities are sold and settled on successive business days, they are said to be experiencing a rolling settlement.