Trade Processing: The Settlement Process (Part 1)

Settlement is, ultimately, the fulfilment of the contract and the reason for executing the deal in the first place - that is, to acquire/dispose of an asset or hedge a risk. We look at the importance of settlement and the teams involved in the process. Firms obtain and agree settlement instructions with counterparties so they can be automatically added to that client's new trades and we discuss this. We see how clients normally affirm cash amounts prior to settlement in order to assist agreement on amounts, currencies, and direction of settlement.