After a trade is executed,it needs to be settled.the clearing and settlement mechanism in indian securities market has witnessed significant changes and several innovations during the last decade. these include use of the state-of-art information technology,emergence of clearing corporations to assume counterparty risk,shorter settlement cycle,dematerialization,electronic transfer of securities and fine-tuned risk management system.
2.Key terminologies used in clearing and settlement process
pay-in-day is the day when the trading members/brokers are required to make payment of funds or delivery of securities to the clearing corporation of the exchange for all transactions traded by or through them in the respective settlement period.
the process of delivering securities to the clearing corporation to effect settlement of a sale transaction.
(b) funds pay-in:
the process of transfer of funds to the clearing corporation to pay for purchase transactions.
pay-out day is the day when the clearing corporation of the stock exchange transfers funds and securities to the broker/trading member who have receivable obligation.
the process of receiving securities from the clearing corporation to complete the securities settlement of a purchase transaction.
the process of transfers of funds from the clearing corporation to complete the funds settlement of a sale transaction.