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Clearing process Meaning

The clearing process in finance refers to the steps required to reconcile and confirm the details of a trade before it is settled. Clearinghouses and central counterparties stand between buyers and sellers, ensuring that trades are matched accurately, obligations are netted and margin requirements are met. For securities, clearing typically occurs after a trade is executed but before the actual transfer of cash and ownership.

During clearing, the parties’ instructions are validated, and any discrepancies are resolved. Netting reduces the number of payments and deliveries by offsetting buy and sell positions. Margin collects collateral to cover counterparty risk. Once clearing is complete, the settlement process transfers securities and cash to the appropriate accounts.

A robust clearing infrastructure reduces systemic risk by guaranteeing trades and maintaining market stability. Innovations like real‑time clearing and distributed ledger technology aim to accelerate this process and lower operational costs.

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Important Disclaimer:

Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

Finery Markets’ software is non-custodial and is provided exclusively to licensed institutional entities that act as independent operators of their own environments. All counterparties are solely responsible for establishing and maintaining their own bilateral trading and settlement relationships. Finery Markets is not a party to any such arrangements and assumes no responsibility for the conduct, verification, or compliance obligations of any users of the software.

Nothing on this website shall be construed as a financial promotion, investment advice, or an offer to engage in regulated activities. Access to and use of the software is strictly limited to clients who have entered into a software licensing agreement with Finery Markets. Persons located in jurisdictions where such access is restricted should not rely on this website or any of its contents.

Additional notice to UK visitors: This website and associated communications are not intended to constitute a financial promotion under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) and related guidance. Access to services provided by Finery Markets is limited to regulated entities, professional clients and eligible counterparties as set out by the Financial Conduct Authority. UK users are not permitted to use this website for the services of Finery Markets if they don't fall within these categories.