InvestorQ : How are obligations determined by the stock exchanges?
Archita Jajjoo made post

How are obligations determined by the stock exchanges?

Answer
user profile image
Mitali Bhutta answered.
2 years ago


Determination of Obligation entails the determination of what counterparties owe, and what counterparties are due to receive on the settlement date. The clearing corporation interposes itself as a central counterparty between the counterparties to trades and nets the positions so that a member has security wise net obligation to receive or deliver a security and has to either pay or receive funds.
The settlement process begins as soon as members’ obligations are determined through the clearing process. The settlement process is carried out by the Clearing Corporation with the help of clearing banks and depositories. The Clearing Corporation provides a major link between the clearing banks and the depositories. This link ensures actual movement of funds as well as securities on the prescribed pay-in and pay-out day.