What is a Clearing Corporation?
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A Clearing Corporation is a part of an exchange or a separate entity and performs three functions, namely, it clears and settles all transactions, i.e. completes the process of receiving and delivering shares/funds to the buyers and sellers in the market, it provides financial guarantee for all transactions executed on the exchange and provides risk management functions. National Securities Clearing Corporation (NSCCL), a 100% subsidiary of NSE, performs the role of a Clearing Corporation for transactions executed on the NSE. What is Rolling Settlement? Under rolling settlement all open positions at the end of the day mandatorily result in payment/ delivery n days later. Currently trades in rolling settlement are settled on T+2 basis where T is the trade day. For example, a trade executed on Monday is mandatorily settled by Wednesday (considering two working days from the trade day). The funds and securities pay-in and pay-out are carried out on T+2 days. What is Pay-in and Pay-out? Pa
Clearing corporations are entities that are connected with exchanges and assist in the processing of investment transactions. Sometimes referred to as clearing houses or firms, the clearing corporation functions to ensure that any executed trade is conducted smoothly as well as in a timely manner. For investors, a clearinghouse functions as the seller, while also fulfilling the role of buyer when dealing with entities that wish to sell securities. A clearing corporation can be concerned with every aspect of a transaction. Often, the corporation will represent the exchange to the investor, making sure that full disclosure about the nature of a security is made. Through the auspices of a clearing broker, the clearing corporation can help to provide details about the background and past performance of the security, as well as prepare projections based on current and anticipated conditions in the market. Once full disclosure is established, the clearing corporation aids in the settlement o
