Financial Risk Manager Part 1

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Explanation:

Correct answer: B — Clearing occurs between execution and settlement.

Clearing is the process that follows trade execution and precedes settlement. It includes matching, confirmation, netting, margining, and novation in centrally cleared markets.

Why the others are false:

A: Clearing is not, by definition, always central; clearing can be bilateral or central.
C: This describes settlement more than clearing.
D: Clearing is not typically described as an intraday process with a several-day horizon; that wording is not accurate as a general definition.

Explanation:

Correct answer: B — Clearing occurs between execution and settlement.

Clearing is the process that follows trade execution and precedes settlement. It includes matching, confirmation, netting, margining, and novation in centrally cleared markets.

Why the others are false:

A: Clearing is not, by definition, always central; clearing can be bilateral or central.
C: This describes settlement more than clearing.
D: Clearing is not typically described as an intraday process with a several-day horizon; that wording is not accurate as a general definition.

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Q-603.1. Which is TRUE of clearing?

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MManit

Last updated: April 18, 2026 at 11:32

By definition, clearing is central

33.3%

Clearing occurs between execution and settlement

66.7%

Clearing refers to the exchange of securities and/or cash and fulfillment of legal obligations

On most exchanges, clearing is an intraday dynamic with an occasional maximum time horizon of several days