What do you mean by dematerialization of shares? How does the
electronic settlement of trade take place?
Answers
What is a Rolling Settlement
A rolling settlement is the process of settling security trades on successive dates based upon the specific date when the original trade was made so that trades executed today will have a settlement date one business day later than trades executed yesterday. This contrasts with account settlement, in which all trades are settled once in a set period of days, regardless of when the trade took place. Trade settlement refers to when the security is delivered after the trade is executed.
BREAKING DOWN Rolling Settlement
Securities that are sold on the secondary market typically settle three business days after the initial trade date. Within a portfolio, if some stocks are sold on Wednesday, they will settle the following Monday if there were no market holidays. Stocks in that same portfolio that are sold on Thursday will settle on the following Tuesday if there were no market holidays. Finally, if some of the stocks are sold on Friday, they will settle the following Wednesday if there were no market holidays. When securities are sold and settled on successive business days, they are said to be experiencing a rolling settlement.