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Settlement of securities is a business process whereby securities or interests in securities are delivered, usually against (in simultaneous exchange for) payment of money, to fulfill contractual obligations, such as those arising under securities trades.
A settlement bank refers to a customer's bank where payments or transactions finally settle and clear for customer use. Often times, the (payer) of a transaction will be a customer of a different bank from the receiver, and so an interbank settlement process must occur.
Customers can use bank payments to pay for products and services online. Instead of writing a paper check, and without needing a credit card, your customers can provide their banking information online and authorize you to securely withdraw payment straight from their bank account.
A settlement is just another way of saying the transaction is complete and will be done as soon as the credit or debit card was swiped. Businesses can work with their credit card processing company to see if they are going to have any type of transactions that will settle immediately.
Settlement is the actual exchange of money, or some other value, for the securities. Clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities.
In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. This process turns the promise of payment (for example, in the form of a check or electronic payment request) into the actual movement of money from one account to another.
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. Clearing houses receive a clearing fee in exchange for clearance services.
The Securities and Exchange Commission has specific rules concerning how long it takes for the sale of stock to become official and the funds made available. The current rules call for a three-day settlement, which means it will take at least three days from the time you sell stock until the money is available.
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