Clearing

Clearing refers to the process by which the buyer and seller of a transaction agree on the terms of the transaction and settle it. This includes the exchange of securities and funds, confirmation of the transaction, and verification of financing.

Usually, clearing is done through a specialized clearinghouse that acts as an intermediary between buyers and sellers, ensuring that all transactions are properly settled. The clearinghouse ensures that both the buyer and seller fulfill their part of the transaction, minimizing the risk of delays or defaults.

Clearing is an important process in the stock market because it ensures that all transactions are settled fairly and properly. Through clearing, investors can be assured that their transactions are settled, and that they receive the corresponding security or amount they paid for.