Rolling Settlement is a mechanism of settling trades done on a stock exchange on T i.e. trade day plus 'X' trading days, where 'X' could be 1,2,3,4 or 5 days. In other words, in T+2 environment, a trade done on T day is settled on the 2nd working day excluding the T day.
In the Rolling Settlements, trades done on each single day are settled separately from the trades done on earlier or subsequent trading days. The netting of trades is done only for the day and not for multiple days. Initially, the trades in Rolling Settlements, to begin with, were settled after 5 trading days from the day of trading. However, w.e.f. April 1, 2002, the trades in all the scrips listed and traded on the exchange were now settled on T+3 basis , which is now T+2 basis. The investors are advised to check with their broker about the exact date of settlement, as deviations are possible on account of intervening holidays etc
Background:
In India, until few years back, the settlement of majority of trades was done on Account Period basis, where trades done in a trading cycle of 5 days were consolidated, scrip-wise netted and settlement of such netted trades took place on a single day in the following week. Thus, it took anywhere between one to two weeks for the investor, depending upon the day of his transaction, to realize the money for shares sold or get delivery of shares purchased.