Clearing
Definition
Clearing — Meaning, Definition & Full Explanation
Clearing is the process of validating, reconciling, and confirming financial transactions before they are settled. It involves the exchange of financial information between counterparties and intermediaries to ensure that all parties agree on the terms of a trade, verify available funds or securities, and manage associated risks. This crucial step ensures the accurate and timely transfer of funds or securities between transacting parties.
What is Clearing?
Clearing is a fundamental step in the financial transaction lifecycle that occurs between the execution of a trade and its final settlement. It acts as an an intermediary process, ensuring that all details of a transaction, whether it involves cheques, securities, derivatives, or electronic fund transfers, are accurate and mutually agreed upon by all involved parties. A clearing house