Skip to content

NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Clearing Process

A broker's client buys 1,000 shares on Monday on a T+1 rolling settlement basis, with no holidays in the week. In which broad sequence does the clearing and settlement activity occur?

Trade on T, obligation computed on T, and pay-in and pay-out on T+1. Under T+1 rolling settlement the clearing corporation determines obligations on the trade day, and funds and securities are exchanged the next working day.

  1. ATrade on T, obligations computed on T, pay-in and pay-out on T+1Correct
  2. BTrade on T, pay-in on T+3, pay-out on T+4
  3. CObligations computed on T+1, pay-in on T+2, pay-out on T+3
  4. DPay-in on T, trade on T+1, pay-out on T+2

Explanation

Under T+1 rolling settlement, a trade done on Monday has its obligations determined by the clearing corporation the same day, and funds and securities pay-in and pay-out take place on Tuesday (T+1). The other sequences describe longer cycles or reverse the order of trading and pay-in.

Did you get it right without looking?

One question tells you little. A timed set on Clearing Process shows your real accuracy, how long you take and where you lose marks.

Practise Clearing ProcessFree diagnostic mock

More Clearing Process questions