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Answer: Clearing occurs between execution and settlement
**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.
Author: Manit Arora
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Q-603.1. Which is TRUE of clearing?
A
By definition, clearing is central
B
Clearing occurs between execution and settlement
C
Clearing refers to the exchange of securities and/or cash and fulfillment of legal obligations
D
On most exchanges, clearing is an intraday dynamic with an occasional maximum time horizon of several days
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