NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Clearing Process
Under the clearing process, what is the term for the process by which a custodian confirms or rejects a trade done by its institutional client before it is admitted for settlement?
The process is trade confirmation by the custodian. The custodian verifies the trade done by its institutional client and confirms or rejects it within the stipulated time, after which confirmed trades go forward into clearing and settlement.
- ATrade confirmation by custodianCorrect
- BAuction
- CRolling settlement
- DShort delivery
Explanation
For institutional trades the custodian confirms the trade details, accepting or rejecting the trade within the prescribed time so that it can move into clearing and settlement. Auction, rolling settlement and short delivery relate to other aspects of settlement.
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