Settlement
What is settlement, and how does it work?
Update : Apr. 02, 2001
Answer:
Settlement is the transfer of funds and securities between buyer and seller once a transaction has been agreed upon. Currently, settlement for trades executed on the TSE market take place on the 3rd business day after the transaction - often referred to as T+3. TSE acts as central counterparty to settlement, so that funds and securities are transferred between members (securities companies) and TSE, not directly between the transacting members and/or customers. To streamline the whole process and to reduce the sheer volume of funds and securities that must be handled, settlement is done on a net basis, with only the difference between each member's sales and purchases changing hands.