Rolling Settlement
Content
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 make payment or delivery of securities to the exchange.
when the exchange makes payment or delivery of securities to the broker.
Example
Transaction on MONDAY Sale Value Purchase Value Settlement on Wednesday PAY IN PAY OUT
Sold 40 Rs.9430 shares of XYZ Co. At Rs. 235.75 per share Bought 75 shares of Rs.231 per share Gross basis Rs.17,325
40 shares of XYZ Co. and Rs.7,895 Rs.7,895
75 shares of XYZ Co. 35 shares of XYZ co.
Net basis
• Receives the share from the stock exchange on behalf of his client
Brokers
Update
• Demat Account or if in physical form send it to Registrar and Transfer Agent
• NSDL • DCSL
Electronic Database Maintenance
NSE BSE
NSCCL BOISL (Clearing House)
Transfer Securities and Funds
Transfer to investors through Clearing Bank
Brokers
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.
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 make payment or delivery of securities to the exchange.
when the exchange makes payment or delivery of securities to the broker.
Example
Transaction on MONDAY Sale Value Purchase Value Settlement on Wednesday PAY IN PAY OUT
Sold 40 Rs.9430 shares of XYZ Co. At Rs. 235.75 per share Bought 75 shares of Rs.231 per share Gross basis Rs.17,325
40 shares of XYZ Co. and Rs.7,895 Rs.7,895
75 shares of XYZ Co. 35 shares of XYZ co.
Net basis
• Receives the share from the stock exchange on behalf of his client
Brokers
Update
• Demat Account or if in physical form send it to Registrar and Transfer Agent
• NSDL • DCSL
Electronic Database Maintenance
NSE BSE
NSCCL BOISL (Clearing House)
Transfer Securities and Funds
Transfer to investors through Clearing Bank
Brokers
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.
