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Rolling Settlement

Reviewed by Vineeth | Updated on Oct 05, 2020

Catalogue

Introduction

A rolling settlement is a method of settling asset trades on continuous days depending on the particular date on which the original trade was placed. The trades that have been completed today will have a settlement date one working day later than trades that were completed yesterday.

This is not on the same lines with account settlement, in which all trades are completely executed at one time in a set period of days. This is done irrespective of when the trades were completed. Trade settlement refers to the time at which the security was delivered after the completion of the trade.

Breaking Down Rolling Settlement

Securities being sold on the secondary market typically settle after the completion of three working days from the original trade date.

Inside a portfolio, if few shares are sold on Wednesday, then they will be settled on the following Monday, considering there are no holidays in between. Similarly, the shares of the same portfolio that were sold on Thursday would be settled on Tuesday if there are no offs in between.

Likewise, if the shares were sold on Friday and there is a holiday on the following Monday, then they will be settled on the following Thursday and not Wednesday. If securities are sold and are settled on the succeeding business days, then they are considered to be going through a rolling settlement.

Same-Day Settlement

Investors participating in account settlements will witness that trades being placed inside a specified time period settling on that day itself. For example, if an organisation settles all trades happening between the 1st and 15th of the month on the 16th of the month, then all investors having placed their trades in this duration settle on the same day. Investors having purchased assets will not be receiving the assets in their account.

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