How Settlement Occurs Essay Example | Topics and Well Written Essays - 750 words

How Settlement Occurs - Essay Example Singapore’s CDP operates in an almost similar manner.The first stage of the clearing process is trading matching. This takes place immediately trade is initiated in the SGX-ST trade engine. Its trading platform is the Quotation and execution system for trading.When trade matching occurs, the CDP becomes the CCP on either side of the transaction by Novation. As a result, brokers from either side are guaranteed efficient performance. In situations of T+1, the CDP goes a step further to notify each individual of their obligations when it comes to security and money.With securities settlement, CDP effects the brokers clearing accounts by crediting the buyer and debiting the seller. The CDP apart from having an account with the clearing bank also has an account with each settling bank. The CDP also has a clearing fund to be used in situations where members are unable to clear their financial obligations.In Germany, the platform used is the Xetra.This is an order driven trading syst em.The transactions matching system is automatic. The orders are kept in a central order book free for all Xetra participants to inspect.All clearing takes place in the stock exchange. This occurs either electronically or on the floor.These are forwarded to the Clearstream system.Clearstream under the safe custody Act is charged with the responsibility of keeping and administering securities.The transactions are settled on the second day of trading(T+2).We have examined the clearing systems for the three nations.