Rolling Settlement

AAA

DEFINITION of 'Rolling Settlement'

The process of settling security trades on successive dates 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.

INVESTOPEDIA EXPLAINS 'Rolling Settlement'

Securities that are sold in 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. Stocks in that same portfolio that are sold on Thursday will settle on the following Tuesday. Finally, if some of the stocks are sold on Friday, they will settle the following Wednesday. When securities are sold and settled on successive business days, they are said to be experiencing a rolling settlement.

RELATED TERMS
  1. Trade Date

    The month, day and year that an order is executed in the market. ...
  2. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  3. Settlement Risk

    The risk that one party will fail to deliver the terms of a contract ...
  4. Settlement Price

    In derivatives markets, the price used for determining profit ...
  5. Trading Account

    1. An account similar to a traditional bank account, holding ...
  6. Discretionary Investment Management

    A form of investment management in which buy and sell decisions ...
Related Articles
  1. Understanding Order Execution
    Investing Basics

    Understanding Order Execution

  2. Do I own a stock as of the trade date ...
    Options & Futures

    Do I own a stock as of the trade date ...

  3. Pick the Right Brokerage Account for ...
    Options & Futures

    Pick the Right Brokerage Account for ...

  4. What are the differences among a real ...
    Home & Auto

    What are the differences among a real ...

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center