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 shear rate/viscosity curve in accompanying graph shows a ratio in viscosity between the channel and the clearance of about 3.
Table 28 Number of Offenses Cleared by Arrest or Exceptional Means Percent of Clearances Involving Persons Under 18 Years of Age by Population Group, 2012 Population group Violent Murder and crime nonnegligent manslaughter TOTAL ALL AGENCIES: Total clearances 442,506 7,384 Percent under 18 8.
The primary purpose of the medical clearance program is to ensure that the assignment will not cause harm to the individual because of his or her medical condition.
3) Examples of the type of records that must be physically verified for a top secret clearance by an investigator include those associated with birth, education, residence, credit, employment, and military service.
The medium tip clearance is similar to a typical tangential rotor tip to chamber side clearance.
In a letter to Secretary O'Leary, DeWitt denounced suspension of his security clearance as "overzealousness and foolishness.
However, in November 1986, DISCO began to process applications for interim secret and interim confidential clearances without requiring a letter of justification from the contracting officer in instances where the FSO specifically stated on the PSQ that an interim clearance was needed.
The Defense Investigative Service of the Department of Defense conducts most of the security investigations, since most of the clearances are issued by that department.
For example, the Office of Management and Budget's (OMB) February 2007 report on security clearances documented quality with a single metric in only one of the six phases of the process.
PSS responds to many inquiries about the security clearance process every month.
Through our reports and testimonies, we have emphasized a need to build more quality and quality monitoring into the clearances process.