The Euroclear System

The purpose of securities clearance and settlement is to administer the exchange of money and securities between parties to a securities trade. Clearance is the process of determining accountability for the exchange of assets and establishes obligations for securities and funds due. Settlement is the completion of a trade wherein securities and, depending on the system, the corresponding funds are delivered and credited to the appropriate accounts. Each trade has two sides: a securities side and a cash side. The securities side concerns the transfer of securities and is the traditional activity of a clearance system. The cash side concerns the transfer of funds corresponding to the securities trade.