Clearance

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Clearance

The process of settling transactions. Most exchanges have one or more clearing houses, which are charged with matching orders together, ensuring that deliveries are made to the correct parties, and collecting margin money. Because so many trades take place on an exchange in a given day, clearing houses exist to process what each party owes or is owed in a central location so the fewest securities actually change hands. For example, suppose that a broker-dealer buys 1000 shares of a security and then, in a completely separate transaction, sells 700 of the same shares. At the end of the trading day, the clearing house would determine that the broker-dealer must only buy 300 shares as the other 700 belong to another party. Clearing houses receive a clearing fee in exchange for clearance services.

Clearance.

Clearance is the first half of the process that completes your order to buy or sell a security. During clearance, the details on both sides of the transaction are compared electronically to ensure that the order to buy and the order to sell correspond.

For example, in a stock transaction, the Committee on Uniform Securities Identification Procedures (CUSIP) number, the number of shares, and the price per share must match.

Next, transactions within each broker-dealer are netted down, or offset, by matching its clients' buy orders against sell orders from others of its clients or among a group of affiliated firms. Their records are then updated to reflect the new ownership and account balances.

Any unmatched orders are forwarded to the National Securities Clearing Corporation (NSCC), which instructs selling broker-dealers to provide the relevant securities and the buying broker-dealer to send the cash.

References in periodicals archive ?
The recommended clearance time by the manufacturer is three weeks.
Our study documents an association between A578S and prolonged parasite clearance time, a finding relevant for future monitoring of P.
The use of technology at incident scenes can have a direct impact on incident clearance time.
Benbrahim said that in Saudi Arabia clearance times could be up to three weeks.
Parasite clearance time and gametocyte clearance time of parasites from four sentinel sites were compared using Log Rank (Mantel-Cox) in the Kaplan-Meier analysis.
Time activity curves were generated for the background corrected data and half clearance times were determined for each limb.
January is still a good clearance time (for sale-savvy shoppers), but now they come with that gift card in their hand," said Eugene JCPenney store manager Jim Trench.
In three hospitals with the service capacity of 15 operations a week, the following numbers of patients on the list--0-14, 15-29, 30-59, and over 60--correspond to clearance time of a week, half a month, a month, over 1 month.
In the meantime the banks make money while your cheque is in the system although the clearance time is being reduced following intervention from consumer bodies.
1) They demonstrated that the concave side has a longer saccharin clearance time, a more significant loss of cilia, fewer seromucous glands, and more inflammatory cells than does the convex side.
Union Pak, a service provider for UPS, has worked with Costa Rican customs to set up a grade system for clearance using colors, from immediate (green), to documentation review (yellow) and full physical inspection (red), reducing clearance time to three hours from three days.