Trading
This query is : Resolved
03 April 2012
Please Explain whats rolling settlement and Trade to trade settlement???
Ajay Mishra
(Expert)
08 April 2012
Hi
Rolling Settlement:
Rolling Settlement is a mechanism of settling trades done on a stock exchange on T i.e. trade day plus "X" trading days, where "X" could be 1,2,3,4 or 5 days. In other words, in T+5 environment, a trade done on T day is settled on the 5th working day excluding the T day. In India, until recently, the settlement of majority of trades was done on Account Period basis, where trades done in a trading cycle of 5 days were consolidated, scrip-wise netted and settlement of such netted trades took place on a single day in the following week. Thus, it took anywhere between one to two weeks for the investor, depending upon the day of his transaction, to realize the money for shares sold or get delivery of shares purchased. However, in the Rolling Settlements, trades done on each single day are settled separately from the trades done on earlier or subsequent trading days. The netting of trades is done only for the day and not for multiple days. Initially, the trades in Rolling Settlements, to begin with, were settled after 5 trading days from the day of trading. However, w.e.f. April 1, 2002, the trades in all the scrips listed and traded on the exchange are now settled on T+3 basis. The investors are advised to check with their broker about the exact date of settlement, as deviations are possible on account of intervening holidays etc.
Regards
Rolling Settlement:
Rolling Settlement is a mechanism of settling trades done on a stock exchange on T i.e. trade day plus "X" trading days, where "X" could be 1,2,3,4 or 5 days. In other words, in T+5 environment, a trade done on T day is settled on the 5th working day excluding the T day. In India, until recently, the settlement of majority of trades was done on Account Period basis, where trades done in a trading cycle of 5 days were consolidated, scrip-wise netted and settlement of such netted trades took place on a single day in the following week. Thus, it took anywhere between one to two weeks for the investor, depending upon the day of his transaction, to realize the money for shares sold or get delivery of shares purchased. However, in the Rolling Settlements, trades done on each single day are settled separately from the trades done on earlier or subsequent trading days. The netting of trades is done only for the day and not for multiple days. Initially, the trades in Rolling Settlements, to begin with, were settled after 5 trading days from the day of trading. However, w.e.f. April 1, 2002, the trades in all the scrips listed and traded on the exchange are now settled on T+3 basis. The investors are advised to check with their broker about the exact date of settlement, as deviations are possible on account of intervening holidays etc.
Regards
Ajay Mishra
(Expert)
08 April 2012
Hi
What is Trade-to-Trade in Rolling Settlements.........
SEBI has mandated that trading and settlement in all listed securities would take place only in CRS. Further, it had directed all companies to sign agreements and establish connectivity with both the depositories latest by September 30, 2001. SEBI had further mandated that the trading and settlement in securities of those companies which have failed to make the required demat arrangements by the above stipulated date, be shifted to Trade-to-Trade basis. Once any scrip is shifted to Trade-to-Trade basis, transactions in the scrip are not netted and all purchase and sale transactions in the same scrip in single settlement are to be settled separately. For example, the trading and settlement in securities of XYZ Ltd. have been shifted to Trade-to-Trade. An investor has bought 100 shares of this company in the morning on April 1, 2008 and he squares off purchase of these 100 shares by selling the same in the trading hours on the same day. In this case, his purchase and sale transactions would not be netted and the investor would be required to give delivery of 100 shares against his sale transaction and payment for the purchase transaction of 100 shares.
Regards
What is Trade-to-Trade in Rolling Settlements.........
SEBI has mandated that trading and settlement in all listed securities would take place only in CRS. Further, it had directed all companies to sign agreements and establish connectivity with both the depositories latest by September 30, 2001. SEBI had further mandated that the trading and settlement in securities of those companies which have failed to make the required demat arrangements by the above stipulated date, be shifted to Trade-to-Trade basis. Once any scrip is shifted to Trade-to-Trade basis, transactions in the scrip are not netted and all purchase and sale transactions in the same scrip in single settlement are to be settled separately. For example, the trading and settlement in securities of XYZ Ltd. have been shifted to Trade-to-Trade. An investor has bought 100 shares of this company in the morning on April 1, 2008 and he squares off purchase of these 100 shares by selling the same in the trading hours on the same day. In this case, his purchase and sale transactions would not be netted and the investor would be required to give delivery of 100 shares against his sale transaction and payment for the purchase transaction of 100 shares.
Regards
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