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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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
* Direct the day-to-day oversight of investigations and decision-making for personnel security clearances.
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The request had been made originally as part of an earlier investigation into the White House security clearance process which had been announced by Cummings in late January.
"I think that when the ministry had to approve all the pictures and videos taken by a drone, it probably went beyond the law," Juraj Dudascaron of the Association of Unmanned Vehicles and Systems (UAVAS) told Sme.In fact, the National Security Authority (NBUacute), which is responsible for explaining the law on classified information, has claimed on its website that the security clearance is required only in the case of "aerial remote sensing of the Earth and aerial metric shooting".
According to KP police department press release, due to ongoing war against terror, security clearance of police personnel had become of vital importance.
It showed that the security clearance of the guard was not sought from the Special Branch.
The VC urged the prime minister to direct the Interior Ministry to issue security clearance to the agreement without further delay.
After watching a debate Saturday between former CIA analyst Philip Mudd and conservative political strategist Paris Dennard, which aired on CNN, President Donald Trump took to Twitter to tease a possible revoking of the former's security clearance.
President Donald Trump indicated Friday he will likely revoke the security clearance of a Justice Department lawyer Bruce Ohr "very quickly," days after canceling it for former CIA director John Brennan.
[USA], Aug 16 (ANI): United States President Donald Trump has cancelled the security clearance of former Central Intelligence Agency (CIA) director John Brennan, who used to deride the former on various issues.
Robert Oppenheimer, the physicist who helped develop the atomic bomb, had his security clearance revoked because of fears over his associations with communists.
Kushner, who has been operating under an interim security clearance for about a year, had his access to the highly classified briefing cut off in the past few weeks, said the sources.

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