Questions tagged [settling-and-clearing]

For questions pertaining to the process of changing ownership between parities of assets usually regarding financial assets.

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When a public company (e.g. Twitter) goes private, when do shareholders receive funds?

I was wondering what is the reasonable time frame when ordinary investors receive the money from a sale of a company that is acquired to become private. I see Twitter was acquired on Thursday (Oct 27, ...
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1 vote
1 answer
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True risk in Risks in Clearance and Settlement

Currently US stocks are settled in T+2 and options are settled in T+1 days. Their is SEC proposal that is going to make stocks settlement to T+1 ( side comment, don't know if options will be cleared ...
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Does any security market use real-time settlements?

I read on cnbc.com (mirror): Tenev also advocated for real-time settlement instead of two-day settlement in order to help combat some of the chaos that occurred during the GameStop saga. Does any ...
2 votes
0 answers
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Why are shares not settled on the same day? [duplicate]

I know the settlement process but I am still confused about why trades/shares are settled on T+2nd day. Why the settlement is not done at the very moment we make the trade? Any clarification on this ...
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2 votes
0 answers
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Which CSD holds my stocks when bought on foreign exchange?

My question is best illustrated via an example: My custodian (a.k.a my "bank") is located in Switzerland I buy a share on the London Stock Exchange The trade is cleared through LCH.Clearnet ...
14 votes
2 answers
3k views

What does "Settling" mean in investing jargon?

When reading upon the definition of Chinese B-shares, I have a question about the following piece of text: The term B-shares refers to equity share investments in companies based in China. These ...
2 votes
0 answers
64 views

Why does a stock exchange need a clearing firm?

I see on wikipedia that "DTCC settled the vast majority of securities transactions in the United States and close to $1.7 quadrillion." OK, so it seems that DTCC is the clearing house that ...
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2 votes
1 answer
66 views

How is it possible for a trade to be executed by a broker but cleared by another broker?

The Interactive Brokers U.S. Microcap Stock Restrictions page says: Execution-only clients (i.e., execute trades through IBKR, but clear those trades elsewhere) may not trade U.S. Microcap Stocks ...
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0 votes
1 answer
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What is the difference between having "book entry ownership" and being the "holder of record" of shares?

I am trying to understand the difference between "book entry ownership" of shares, and being the "holder of record" of shares. Apparently, the distinction is important in answering ...
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1 vote
1 answer
93 views

Why do we need a depository and clearing center today?

I imagine that Back In The Day, the depository kept real securities in some safe and gave physical receipts about the presence of such a quantity of funds in such an account. Today, though, all ...
1 vote
0 answers
560 views

What are the risks of buying OTC stocks whose transfer agent is not verified?

I noticed that some OTC stocks have the "Transfer Agent Verified" mark, while others do not. For example, GoldMining Inc. (GLDLF) has it, while Gold Reserve, Inc. (GDRZF) does not. I've ...
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3 votes
2 answers
184 views

T, T+1, T+2 trading modes

Why are there different settlements modes T, T+1, T+2? why can't everything be settlement "today" T0? I understand what the difference is, but I don't understand why people did this and in ...
2 votes
1 answer
755 views

How do I determine whether or not a stock is DTC-eligible?

From my understanding, exchange-listed stocks are all DTC-eligible (DTC meaning Depository Trust Company), so my question is more about the securities that trade over-the-counter. How can I check ...
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1 vote
1 answer
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What are the actual mechanics of an oil future trade, especially at the moment when the price goes negative?

I hope this is on-topic. It's not directly about personal finance, but it's not an academic economics question either. It is about what happens behind the scenes. The question is motivated by the ...
-1 votes
1 answer
110 views

How can you explain how international wire transfers work succinctly?

I'm interested in a conceptual explanation at the accounting level, i.e. who owes who what during the process. I couldn't find anything on the web or on YouTube. It's very cumbersome to describe in ...
1 vote
1 answer
92 views

Settlement dates re pattern day trading stocks

I've been trading options on a pattern day trading account for a couple of years and now want to trade stocks. Options are settled overnight and funds available the next day. And day trading buying ...
1 vote
1 answer
2k views

Using unsettled cash to buy securities on Interactive Brokers

From Interactive Broker's Availability of proceeds in a 'Cash' type account article: Account holders who wish to have access to settled funds prior to the settlement day may do so by electing an ...
1 vote
0 answers
56 views

Settlement Period for options pre 1993

I was reading Settlement Period and wondering what was the settlement duration for options pre 1993. For equity/etf, it seems it was five days. So for options, was it four days ? , any verifiable ...
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2 votes
1 answer
191 views

Settle stocks on the same day [T] instead of [T+2/3]

Is it possible to have same day settlement on the stock markets by using more efficient processes and technology? I know that the T+3 settlement was earlier replaced by the T+2 settlement process. ...
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0 votes
1 answer
1k views

Using unsettled funds to buy mutual funds in a margin account. Do I need to pay margin interest?

I'm trying to figure out security settling rules. Say I have a margin account and I own 100 settled shares of ABC stock. I then sell my ABC shares and on the same day I use the unsettled funds from ...
0 votes
1 answer
488 views

What is the settlement date for ACH?

DTCC requires that equities, municipal debt securities, corporate debt securities, and CDs settle T+2 and US Treasury & Agency debt securities settle T+1. Is there any strict settlement date for ...
1 vote
3 answers
935 views

Confusion with settlement time in stocks, forex, futures etc

I've been trading cryptocurrencies for a little while now, and recently I have been looking into stocks, futures and forex etc. During my research, I have run into a subject called settlement times. I ...
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2 votes
4 answers
4k views

What exactly is the difference between a clearing house and a counterparty clearing house?

I know this may sound like a stupid question but I have not yet found an adequate definition of the two that can clearly tell me the difference between them.
4 votes
3 answers
1k views

Short an option - random assignment?

I'm still really new to options but I'm trying to understand this concept of assignment. Let’s say I’m short a call of Microsoft at a strike of 80 set to expire in a quarter. Microsoft surges for ...
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0 votes
1 answer
997 views

Settlement of Shares Underlying a Covered Call Option

If I buy 100 shares of XYZ stock one or two minutes before selling one XYZ call option, would this call option be considered "covered", or would it be considered "uncovered" until the 100 shares ...
2 votes
2 answers
11k views

What is street-side booking?

What is the meaning of the term "street-side bookings" in the context of broker operations? I suspect it has something to do with the Central Counter Party Clearing outlined in https://en.wikipedia....
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Is my spouse at risk for a joint filing in a year where I have settled a major debt? [closed]

I settled and wrote-off a major debt. This was recorded as 1099-E income. I incurred all of this debt under my name only, and she was not my spouse at the time I got into the debt. She was my ...
1 vote
2 answers
807 views

Understanding the T + 3 settlement days rule

If I: Buy X at time T Sell X at time T' where T' < T +3 Buy Y on T' with proceeds from sale of X. Cannot sell Y before T' +3. Ref:http://www.slideshare.net/mring33/using-java Slide 29 It ...
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2 votes
1 answer
611 views

How to properly understand international wire transfers?

I am having a ridiculous time with international (inwards, to Australian account) wire transfers. They have about a 50% chance of succeeding, and I don't know who is being honest with me when things ...
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