Tag Archives | Settlement

Picture of Direct and Indirect Participants to a CSM

Direct and Indirect Participants to Clearing and Settlement Systems

Banks can join a clearing system or a settlement system as direct participant (DP) or as indirect participant (IP). After reading this post, you will understand the differences between these two types of participants and why only direct participants settle in CSM. The following figure depicts direct and indirect participants and the relationship they have to […]

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Real-Time Gross Settlement System

Clearing and Settlement Mechanisms – Settlement

The Bank of International Settlement (BIS) defines settlement as an act that discharges obligations in respect of funds or securities transfers between two or more parties. Thus settlement is the funds transfer that is carried out by one party to fulfill his obligations towards the counterparty in a financial operation. Settlement must be performed after […]

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Illustration of Multilateral Clearing Mechanism

Clearing and Settlement Mechanisms – Multilateral Clearing

After presenting the bilateral clearing in the previous article, it is now time to move to the next level: the multilateral clearing. In a multilateral clearing, a high number of financial institutions are involved. But the principle is the same as for bilateral clearing. All the participant banks will exchange payments among each other up to […]

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