Clearing and Settlement

Clearing and settlement are fundamental processes in financial markets. After orders are matched and the trade is executed, the record is submitted to the clearing agency (in this case the CBL), which confirms the availability of securities from the seller’s CSD account. The clearing agency then matches the buyer and seller record and confirms that the counterparts agree to the terms. Following the clearing process, the clearing agency fulfills the delivery requirements of the securities, the object of trade.

At this stage the settlement agency will have received funds from the buyer and the officer clearing securities will confirm this before sending out settlement message to the settlement agency. At the end of the process, the clearing agency will create and credit a CSD account for the buyer, debit seller’s CSD account and instruct the buyer’s settlement agency to transfer funds to the seller’s settlement agency and ultimately the seller. The whole process is expected to be a Delivery versus Payment (DvP) and be completed within two (T+2) business days.