What is Rolling Settlement

Rolling Settlement refers to settlement mechanism in the stock market where trades done by the investor or trader are settled based on the net obligations for the day. Currently the trades pertaining to the rolling settlement are settled on a T+2 day basis where T stands for the day when the trade is executed by the investor or trader. So for example if one has bought some shares on Tuesday than it will be settled on Thursday, However those shares will be credited to investor or trader account on Friday only as it takes 24 hours for broker to deposit shares to the investor or trader account

In the context of rolling settlement, it is essential that one has the knowledge of two terms that is pay – in and pay – out. Pay in day is the day when the broker makes payment or delivery of securities to the stock exchange and pay out day is the day when the exchange makes payment or delivery of securities to the broker; it is done on a T+2 day basis.