Clearing
The behind-the-scenes process of confirming a trade, working out who owes what and preparing it for…
In plain English
The behind-the-scenes process of confirming a trade, working out who owes what and preparing it for settlement.
After a deal is struck, clearing checks that both sides agree on the details, calculates obligations and manages risk until the money and assets actually change hands, a step called settlement.
In exchange-traded markets a clearing house does this and guarantees the trade. In currencies, systems like CLS help settle the two legs of a trade safely.
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