Equities and BondsClearing House
- A clearing house is an entity that substitutes itself as a seller to every buyer and a buyer to every seller and guarantees the execution of trade settlement by assuming an obligation of delivery of securities and payment of funds. As a counterparty of the settlement, a clearing house instructs settlement facilities to transfer securities and funds.
- The process flow from trade execution to settlement in the securities market can be divided into three stages: trade execution (exchange, etc.), clearing (clearing house) and settlement (settlement facility). A clearing house is placed between trade execution and settlement, where it assumes obligations associated with the trade executed on an exchange, etc., and offsets the obligations efficiently by netting, and instructs the settlement facilities to settle the trades.
- The sharing of functions in the securities market from trading to settlement is as follows.
＜Figure.＞ Relevant institutions from trade execution to settlement ～clearing and settlement of cash product～