What does settlement cycle i.e rolling settlement mean?
Rolling settlement is 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.
The normal settlement cycle for a transaction on the exchange is T+2 days, i.e if you buy a share it will take 2 days for it to be credited to your DEMAT account. (Also implies that if you sell shares you will be able to withdraw that amount after T+2 days)
Ex- if you buy a share on Monday, it’ll be credited to your account on Wednesday evening. (If you sell shares on Monday it'll be withdrawable on Wednesday)
The settlement cycle for Derivatives (F&O, MCX) is T+1 day.
Check out this chapter on varsity on settlements for a detailed explanation.
Note: On settlement holidays since the Depositories and clearing members are closed, the settlement duration get extended & stocks bought a day before the settlement holidays will not show up on the trading platform. To know the impact of settlement holidays check out this post on Z-connect. Check out the Holiday Calendar to see the list of settlement holidays.
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