Clearing & Settlement

What you'll learn

• ✓Describe T+1/T+2 settlement
• ✓Explain the role of a CCP

Lessons

1. 🧾
   Filled, But Not Finished

   What happens after you click Buy
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2. The Settlement Timeline

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3. Meet the Central Counterparty

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4. When the Plumbing Leaks

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5. Final Boss: The Plumbing Quiz

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• Final Rule: Shortening the Securities Transaction Settlement Cycle (Rule 15c6-1 amended)
  U.S. Securities and Exchange Commission · institutional
  Authoritative source for the US move from T+2 to T+1 effective May 28, 2024.
  https://www.sec.gov/rules/2023/02/shortening-securities-transaction-settlement-cycle
• SEC Press Release 2023-29: SEC Adopts Rule Changes to Shorten Settlement Cycle
  U.S. Securities and Exchange Commission · institutional
  Backs up the date and rationale for T+1 adoption.
  https://www.sec.gov/news/press-release/2023-29
• How NSCC Clearing Works
  DTCC · institutional
  Reference for DTCC/NSCC's role as the central counterparty for US equities and for the netting mechanics.
  https://www.dtcc.com/clearing-services/equities-clearing-services
• Principles for Financial Market Infrastructures (PFMI)
  BIS Committee on Payments and Market Infrastructures and IOSCO · institutional
  Global standard for CCP risk management, default waterfall, and margin.
  https://www.bis.org/cpmi/publ/d101a.pdf
• Central Counterparty Default Management and the Collapse of Lehman Brothers
  LCH (LSEG) · institutional
  First-hand account of LCH SwapClear handling Lehman's 9 trillion dollar swap book in 2008.
  https://www.lch.com/resources/news/how-lchclearnet-managed-lehman-brothers-default
• Incentives to centrally clear over-the-counter derivatives
  BIS / FSB / CPMI / IOSCO joint study · institutional
  Background on post-2008 push toward central clearing.
  https://www.bis.org/publ/othp29.htm
• CCP12: The Global Association of Central Counterparties
  CCP12 · institutional
  Industry papers on netting efficiency and CCP design.
  https://ccp12.org/
• The Financial Crisis Inquiry Report
  Financial Crisis Inquiry Commission (US Government) · institutional
  Official record of Lehman counterparty exposure and post-default unwinds in 2008.
  https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf
• Regulation SHO and Fails-to-Deliver Data
  U.S. Securities and Exchange Commission · institutional
  Backs up the discussion of failed trades and buy-ins.
  https://www.sec.gov/data/foiadocsfailsdatahtm
• ESMA Public Register of Authorised CCPs
  European Securities and Markets Authority · institutional
  Reference list of European CCPs including LCH and Eurex Clearing.
  https://www.esma.europa.eu/publications-and-data/registers-and-data