Series 53: Clearing And Settlement

Clearing and Settlement

After the RTTM confirms the reported trades, it sends the matched trades to the NSCC and its Continuous Net Settlement System. Continuous net settlement is a type of clearing practice where transactions are not settled until the end of a business day. This system nets the buy-and-sell activity of each traded security on any given day for each of the member firms to arrive at one settlement quantity for that security. All transactions are then netted into one final money settlement for each firm.

Aside from clearing and settling municipals transactions, the NSCC also guarantees that all confirmed and matched transactions entering its system will settle, even if a principal should default.

The settlement date is the day on which delivery is due. For transactions paid in cash, the settlement date is the trade date. For regular way trades, settlement is typically on the second business day following the trade date. For all other transactions, settlement is a date agreed upon by both parties. However, no purchase or sale of a municipal