Rolling Settlement

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.

BREAKING DOWN '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.

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