Rolling settlement refers to a method of settling trades on a continuous basis, rather than on a predetermined settlement date. In a rolling settlement system, trades are settled on a rolling basis as they are executed, rather than being held until the end of the settlement period.
The settlement cycle refers to the time frame in which trades must be settled. In a rolling settlement system, the settlement cycle may be shorter than in a traditional settlement system, where all trades must be settled at the same time at the end of the settlement period.
Both rolling settlement and settlement cycles are used in the securities market to facilitate the smooth and efficient settlement of trades. In a rolling settlement system, trades are typically settled on the same day they are executed, or on the next business day, depending on the specific rules and regulations of the market. This helps to reduce the risk of settlement failures and allows for more efficient use of capital.