Process objective
Ensure accurate accountability of individual positions and obligations, while netting positions to reduce the costs of trading and servicing securities

Process requirements
Providers of clearing services must operate in a highly-automated environment in order to ensure accurate records are kept of mutual positions in the exchange of cash and securities between counterparties or among a group of participants and to effect orderly settlement of their obligations on a net basis.

The netting of positions to reduce a large number of individual positions or obligations to a small number is the crux of clearing.  Service providers and clients should pay attention to the form which the netting takes - and the underlying legal agreements - in order to ensure the appropriate degree of legal enforceability in the event of default of one of the parties.

Providers of clearing services should offer a wide array of credit products, such as overnight loans, day loans, letter of credit, revolving credit and intraday credit.

 


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Service Matrix