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 furniture was brought into his shop -- Steptoe antique and second hand goods, in Market Street, Ruthin -- by a woman following a house clearance.
I think he used to do house clearances, sell antiques and things like that,'' said Kevin, 34.
They buy in discontinued stock from places like antique shops, rag markets and house clearances and then they sell them to people who have broken plates or who need to make up an extra two place settings in their six-piece dinner service.
We are doing house clearances and just about everything else.
Included in the sale on Saturday are several house clearances which include a Burr Walnut flapover card table, an oak eight day longcase clock by J Ramsbottom, and a collection of named T G Green Cornishware jars.
m Household Sales every Wednesday Specialist Sales almost every Friday Entries for all sales invited Collection Service available Full or part house clearances undertaken Auctioneers and Valuers Back Madoc Street, Llandudno, Conwy LL30 2TE Telephone: 01492 877239 Fax: 01492 875728 Email: auctions@ballandboyd.