Rolling settlement

 

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Rolling settlement

Settlement is the process by which investors pay for shares they have bought and receive payment for shares they have sold. Before July 1994, this process was done by means of an 'account period', normally ten working days. All the transactions during that period were balanced against each other to produce a single figure, which was either paid to the investor or due from him, depending on whether the value of his purchases was higher or lower than the value of his sales in the period. One of the features of the account period was that transactions taking place at the beginning of it (say, Day 1) didn't have to be settled until about 14 days later, whereas transactions at the end (say Day 10) had to be settled within 4 days.In July 1994, the account period system was replaced by ten day (T+10) rolling settlement, which means that each transaction has to be settled ten days after the transaction date. This was subsequently reduced to five days (T+5) and in February 2001 was reduced to three days (T+3).These significance of rolling settlement and of shortened settlement times is that when investors sell shares, the proceeds get paid into their account quicker, and when they buy shares they have to pay for them quicker. It requires careful money management on the part of the investor.



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Bank for International Settlements

Bank for International Settlements

The central bankers' bank, based in Basle, Switzerland.


Dispute settlement mechanism

Dispute settlement mechanism

The procedure by which the WTO settles disputes among members, primarily by means of a three-person panel that hears the case and issues a report, subject to review by the Appellate Body.


Dispute Settlement Body

Dispute Settlement Body

The entity within the WTO that formally deals with disputes between members. It consists of all WTO members meeting together to consider reports of panels and the Appellate Body.


Settlement date

Settlement date

The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade. For mutual funds, settlement usually occurs in the US the day following the trade. In some regional markets, foreign shares may require months to settle.


Cash sale or settlement

Cash sale or settlement

Transaction in which a contract is settled on the same day as the trade date, or the next day if the trade occurs after 2:30 p.m. EST and the parties agree to this procedure. Often occurs because a party is strapped for cash and cannot wait until the regular five-business day settlement. See: Settlement date.


Further Suggestions

Immediate settlement
Structured settlement
settlement
Real Estate Settlement Procedures Act (RESPA)
Settlement price
Settlement options
Settlement risk
Good delivery and settlement procedures
Bank for International Settlements (BIS)
settlement options
cash settlement
Settlement
Regular settlement
settlement day
Continuous net settlement (CNS)
Next day settlement
Skip day settlement
Settlement rate
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Exercise settlement amount
Uniform Settlement Statement
Same Day Funds Settlement (SDFS)
Insurance settlement
Cash settlement contracts
Regular way settlement


 
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