Clearing System
/ˈklɪərɪŋ ˌsɪstəm/
Definitions
- (n.) A network or mechanism used by financial institutions or clearinghouses to facilitate the settlement of payments, securities, or derivatives transactions, ensuring the transfer of funds or instruments between parties.
The clearing system ensured all transactions were settled efficiently at the end of the trading day.
- (n.) The process by which obligations arising from financial transactions are calculated, matched, and finalized among participating institutions.
The bank participates in a clearing system to reconcile payments with other banks daily.
Forms
- clearing systems
Related terms
See also
Commentary
The term broadly covers both the infrastructure (system) and the procedural aspects (process) of clearing in financial law; distinctions between clearing and settlement are important in drafting agreements.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.