Introduction to Clearing and Settlement

Introduction to Clearing and Settlement

Peter Eisenhardt

30 years: Capital markets & investment banking

Clearing and settlement directly follows a trade. Clearing is what comes immediately after the trade, where all the terms of the deal are double-checked. Settlement is the final stage, in which the transfer of securities and money takes place. In this video, Peter briefly explains how these key processes in a securities transaction are achieved.

Clearing and settlement directly follows a trade. Clearing is what comes immediately after the trade, where all the terms of the deal are double-checked. Settlement is the final stage, in which the transfer of securities and money takes place. In this video, Peter briefly explains how these key processes in a securities transaction are achieved.

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Introduction to Clearing and Settlement

3 mins 2 secs

Overview

The clearing and settlement of securities takes place after a trade. Ideally, all the terms of the deal are verified without error in the clearing stage and settlement takes place via delivery versus payment (DVP), so that payment and delivery of the security occurs simultaneously.

Key learning objectives:

  • Explain clearing and settlement

  • Describe the terms of a deal that are reviewed at the clearing stage

  • Define DVP and explain when this takes place

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Summary
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