InvestorQ : What is meant by Rolling Settlements in the stock markets?
Dia Deshpande made post

What is meant by Rolling Settlements in the stock markets?

Answer
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Mary Joseph answered.
2 years ago


Every order that is executed on the share market must be settled provided it is not squared off intraday. In an intraday square off there is no net position. Rolling settlements comes into play where there is a net positive position or a net negative position. Buyers receive their shares and sellers receive the sale proceeds. The settlement is the procedure wherein the buyers procure their shares and sellers receive their monies.
The rolling settlement is when all trades have to be settled at the end of the day. That means; if you have not squared the stock at the end of the day it automatically goes into your demat account and you do not have a choice. In other words, the buyer must pay for his purchase and seller delivers the sold shares in one day on the share market. Indian share markets adopted the T+3 rolling settlement in 2001 and subsequently shifted to T+2 System; which continues to date. That means the transactions are completed on Day One and the settlement of these trades must be completed within two working days from Day One. T refers to the Trade Date and T+2 means 2 trading days after the trade date. If there are holidays or Sundays in between then your T+2 gets extended back by that extent.