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The Clearing and Settlement Process Is A Series of Complex Tasks

The clearing and settlement process involves complex tasks to compare trades before the settlement date and determine obligations. Clearing refers to comparing trades, while settlement is the exchange of cash and securities on the contractual date. Settlement can be provisional or final.

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Hanzo vargas
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257 views2 pages

The Clearing and Settlement Process Is A Series of Complex Tasks

The clearing and settlement process involves complex tasks to compare trades before the settlement date and determine obligations. Clearing refers to comparing trades, while settlement is the exchange of cash and securities on the contractual date. Settlement can be provisional or final.

Uploaded by

Hanzo vargas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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The clearing and settlement process is a series of complex tasks, how can one say that it

is successfully functioning system?

Clearing. Generally, clearing refers to the process of comparing trades before settlement

date or the determination of the net obligations of the broker participants (for both securities

and cash). In certain publications, clearing may be used synonymously with settlement.

Settlement. The settlement process refers to the exchange of cash and securities on the

Contractual settlement date. The settlement date can be agreed upon at trade execution or

can be prescribed by local trading conventions. Settlement may be processed on a

Provisional or a final basis.

What are the strategies in managing foreign exchange risks?

The simplest risk management strategy for reducing foreign exchange risk is to make and
receive payments only in your own currency. But your cash flow risk can increase if customers
with different native currencies time their payments to take advantage of exchange rate
fluctuations. You might also lose customers to competitors who offer more currency flexibility
and your suppliers may be unwilling to accept payments in what is to them a foreign currency.
So you may therefore find that competitive pressures force you to explore a risk management
strategy that helps manage your foreign exchange risk more efficiently.

Why is equity management important on the part of a treasurer?

Treasuries manage the balance sheet of a business and enable its functions to run smoothly.
By optimizing liquidity and cost of capital, it actually has a core role in increasing return on
equity and driving shareholder returns.
Briefly describe the key features and differences among the following investment vehicle:

1. Certificate of time deposits

 A certificate of deposit, commonly called a CD, is a special savings account you can
open at most banks and credit unions. But unlike a regular savings account, CDs require
you to lock your funds away for a specific period of time until a maturity date. In return,
you'll get a higher interest rate.

2. Money market fund

 A money market fund is a mutual fund that invests solely in cash and cash equivalent
securities, which are also called money market instruments. These vehicles are very
liquid short-term investments with high credit quality. Money market funds generally
invest in such instruments as: Certificates of deposit (CDs)

3. Bond

 Bonds are issued by governments and corporations when they want to raise money. By
buying a bond, you're giving the issuer a loan, and they agree to pay you back the face
value of the loan on a specific date, and to pay you periodic interest opens a layer
closed payments along the way, usually twice a year.

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