Friday, August 5, 2011

What is Rolling Settlement Cycle?


Rolling settlement is a system to settle share transactions in predefined number or days. It is a mechanism of settling trades done on a stock exchange on the Day of Trade (T) plus "X" trading days. "X" trading days could be any number of days like 1,2,3,4 or 5 days. So, if we say the rolling settlement for a transaction is T+3 then it means that the transaction will be settled in TODAY + Next 3 Days. In other words, in T+3 environment, a trade done on T day is settled on the 3rd working day excluding the T day.

In Rolling Settlements, share trading done on each single day are settled separately from the trades done on earlier or subsequent trading days.

In India, after April 1, 2002, all trades done on stock exchange are settled on T+3 basis. There could be some deviations because of Bank Closing or National Holidays
At NSE and BSE, trades in rolling settlement are settled on a T+2 basis i.e. on the 2nd working day.  Saturdays and Sundays are excluded because the stock exchanges remain closed on weekends. 

Rolling Settlement

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