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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 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 ?
Kelly, whose handling of the Porter case was heavily criticised, decreed on Feb 16 that any interim security clearances for staffers whose background investigations had been pending since June 1 or before would be discontinued within a week.
Grassley and Blumenthal requested information on how interim security clearances were handled for White House and congressional employees during the current and previous administrations.
Under United States' law, the president can override findings by the FBI and grant national security clearance to whoever the commander-in-chief sees fit.
Security clearances for people entrusted with safeguarding the nation's most sensitive information should be granted only to those who are determined to be worthy of that trust.
The bottom line is that employees who seek mental health counseling overseas almost never lose either their medical or security clearance as a result of reaching out for help.
Two of these proposed changes are related to the national security clearance process during transitions.
French authorities have rescinded the security clearance of 43 baggage handlers at the Charles de Gaulle international airport.
Daniel Hirsch, a long-time employee of the State Department had his security clearance revoked 3.
The new, ambiguous wording could be interpreted to mean that sexual orientation may be used "in part" to deny a person a security clearance.
They will find something to use to revoke your security clearance, which is what they did with me, which destroys your career in the intel field, makes you unemployable forever.
Oppenheimer lost his security clearance in the 1950s for speaking out against the hydrogen bomb.
security clearances are in high demand, and a backlog in security clearance processing is making them even more valuable.

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