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 ?
Summary: TEHRAN (FNA)- US President Donald Trump's son-in-law and White House adviser, Jared Kushner, has been stripped of his clearance to view top-secret intelligence.
The inauguration of the clearance office, which is housed in a building provided by the city government of Masbate, is set to start at 10:30 this Thursday morning.
Jowyk understands the both the gravity and complexity of the security clearance process.
The shear of the polymer in the flight clearance can add significantly to the melt temperature and energy efficiency.
Because the clearance percentages for crimes committed by juveniles include only those clearances in which no adults were involved, the figures in this table should not be used to present a definitive picture of juvenile involvement in crime.
Categories: November 16, 2010, GAO High Risk Series, Internal controls, Personnel management, Personnel security clearance programs, Program evaluation, Program management, Quality assurance, Quality control, Quality improvement, Requirements definition, Schedule slippages, Security clearance backlogs, Security clearances, Security policies, Total quality management
MED also once denied clearances to patients in their first year after receiving a coronary artery stent because the re-occlusion rate was too high.
Ironically, neither a lack of financial smarts nor the accrual of massive debt have affected the security clearances of politicians serving in Washington--who piled an additional $2 trillion on the National Debt from fiscal year 2002 to 2005.
I get the clearance early to do a last-minute check of the weather based on the clearance routing.
The management lessons regarding clearances are threefold.
The small or tightest tip clearance is the high shear-mixing zone.
Again, the supposedly classified material cited by DeWitt had been widely published elsewhere, but his security clearance was revoked anyway.