Investing & Digital AssetsInvesting & Digital Assets GlossaryPart 2 of 4
Clearing and Settlement Glossary
10 terms from the Investing & Digital Assets book's Clearing and Settlement part, each defined in a line and linked to the chapter that explains it.
- Affirmation: an institutional customer's agreement to a trade's allocation and confirmation details, required as soon as technologically practicable and no later than the end of trade date under T+1 (The Investing & Digital Assets Business).
- Book entry: moving ownership of securities by debiting and crediting participants' accounts at a depository, with no certificate moving (The Investing & Digital Assets Business).
- Continuous Net Settlement (CNS): NSCC's system that nets each member's eligible trades in a security to one position per day and becomes counterparty to each accepted trade (The Investing & Digital Assets Business).
- DTC (The Depository Trust Company): the US securities depository, where settlement moves securities and cash between participants by book entry (The Investing & Digital Assets Business).
- Novation: a clearing house replacing the original counterparties to a trade, becoming buyer to every seller and seller to every buyer and guaranteeing settlement (The Investing & Digital Assets Business).
- NSCC (National Securities Clearing Corporation): the DTCC clearing agency that clears and nets US equity trades and collects margin from its members (The Investing & Digital Assets Business).
- SIPC protection: coverage for missing customer assets when a member broker-dealer fails, up to $500,000 per customer including $250,000 of cash; not for losses in value, non-security digital assets or stablecoins (The Investing & Digital Assets Business).
- Stock record: a broker-dealer's securities record of every long and short position by security as of clearance dates, and where each long position is held (The Investing & Digital Assets Business).
- T+1: the standard US settlement cycle of one business day after trade date, in force since May 28, 2024 (The Investing & Digital Assets Business).
- Trade confirmation (Rule 10b-10): the written notice a broker-dealer gives at or before completion of a transaction, with date, time, price, quantity, capacity and payment for order flow (The Investing & Digital Assets Business).