Rolling Settlement

History
Before the Rolling Settlement was introduced in year
2000, the normal settlement period was 5 days and it
used to take about 15-20 days to get the sale
proceeds of the shares.
Rolling settlement was first introduced in India by
OTCEI.
It was introduced in India on Jan. 10, 2000 when 10
scrip’s were put in the compulsory rolling settlement.
Initially, the settlement period was T+5 but it has
been gradually reduced toT+2 with effect from April
1, 2003.
SEBI added a total of 156 scrips under rolling
settlement.
 Introduction
Rolling Settlement system the trades
completed on a particular day are settled after
given no's of business days.
At present NSE and BSE it is after 2 days and
hence called T+2 settlement.
Trade day, will be settled by exchange of
money and securities on the second business
day (excluding Saturday, Sundays, Bank and
Exchange Trading Holidays).
E.g.- Trade completed on Monday are settled
on Wednesday.
PAY IN PAY OUT
Pay in day is the day Pay out day is the day
when the brokers shall when the exchange
make payment or makes payment or
delivery of securities to delivery of securities to
the exchange. the broker.
 Example
Transaction Sale Value Purchase Settlement on PAY OUT
on MONDAY Value Wednesday
PAY IN

Sold 40 shares Rs.9430

of XYZ Co. At
Rs. 235.75 per
share

Bought 75 Rs.17,325
shares of
Rs.231 per
share
Gross basis 40 shares of 75 shares of
XYZ Co. and XYZ Co.
Rs.7,895
Net basis Rs.7,895 35 shares of
XYZ co.
●
Receives the share from the stock exchange on behalf of his client

Brokers
 NSE NSCCL
BOISL
BSE (Clearing House)

Transfer
Securities and
Funds

Transfer to
Brokers investors through
Clearing Bank
 Reasons
Reduces the market risk to a
considerable extent
The investors trading on a particular
day are treated differently from the
investors trading on the preceding or
succeeding day.
Reduces market volatility.
It limits the outstanding positions and
reduces settlement risk.
Made trading cycle uniform.