CISI Global Securities Operations key terms

The day on which a securities trade is agreed and priced between buyer and seller, starting the clock for confirmation, clearing and settlement obligations.

The contractual date on which cash and securities must be exchanged to discharge a trade, normally expressed as a number of business days after trade date.

The standard elapsed time between trade date and settlement date in a market, such as T+1 or T+2, set by market convention or regulation.

A settlement mechanism in which the transfer of securities and the transfer of cash happen simultaneously and are linked, so neither party delivers without receiving.

A settlement arrangement for foreign exchange in which the two currency legs are settled simultaneously, removing the risk that one party pays and the other fails to.

The risk that a party paying away one currency loses the full amount because the counterparty fails before paying the counter-currency leg, typically across time zones.

An entity that holds securities in immobilised or dematerialised form and records ownership by book entry, enabling transfer of title without physical movement of certificates.

An entity that interposes itself between trade counterparties, becoming buyer to every seller and seller to every buyer, and manages counterparty risk through margining and default funds.

The legal process by which a central counterparty replaces the original bilateral contract with two new contracts, one with each original party.

A firm admitted to a clearing house or central counterparty that clears its own and its clients' trades and carries the resulting margin and default-fund obligations.

Collateral collected from a clearing member at the outset of a position to cover potential future exposure over the close-out period assumed in the risk model.

Collateral or cash transferred daily to reflect the change in value of open positions, settling the mark-to-market movement since the previous margin call.

The practice of holding physical securities certificates in a depository vault so that ownership changes are recorded by book entry rather than by moving paper.

The conversion of physical securities certificates into electronic records, so that no paper instrument exists and legal title is evidenced solely by the register entry.

A movement of securities between accounts on a depository's electronic records that changes legal or beneficial ownership without any physical delivery of certificates.

A regulated institution that safekeeps client securities, processes settlements and income, and maintains records of holdings on behalf of the underlying owner.

A local institution appointed by a global custodian to hold assets and settle trades in a market where the custodian has no direct membership or presence.

A provider that safekeeps and services a client's assets across many markets, usually through a network of appointed local sub-custodians and agents.

The requirement to hold client assets separately from the firm's own assets and from those of other clients, so that they remain identifiable and returnable on insolvency.

Funds held by a firm on behalf of clients, which must be identified, segregated and protected under client-asset rules rather than treated as the firm's own cash.

An event initiated by an issuer that affects the securities it has issued, such as a dividend, rights issue, bonus issue, merger or stock split, requiring processing for holders.

The date from which a security trades without the right to the pending corporate action, so buyers on or after that date do not receive the benefit.

The date on which the issuer or depository determines which holders are registered and therefore entitled to participate in a corporate action.

The quantum of cash, securities or rights a holder is due from a corporate action, calculated by applying the event terms to the holding on the record date.

Tax deducted at source by a payer or issuer on income such as dividends or interest, potentially reduced by a treaty and reclaimed where over-deducted.

A claim submitted to a tax authority to recover withholding tax deducted above the rate allowed under a double-taxation treaty or domestic exemption.

The process of comparing two independent records, such as internal ledgers and custodian statements, and investigating differences until they agree or are explained.

A discrepancy between two records being reconciled, such as a position, cash or transaction mismatch, which must be investigated, aged and resolved.

A holding account used temporarily for items that cannot yet be allocated to the correct client or ledger, pending investigation and clearing.

The automated end-to-end handling of a trade from execution through confirmation, clearing and settlement without manual re-keying or intervention.

The process by which the two parties to a trade compare and agree the economic terms, such as price, quantity, settlement date and account details.

A client's agreement to the details of an allocation or trade submitted by its broker or executing party, often through a central matching utility.

The process of splitting an aggregated or block execution into separate accounts and quantities so each underlying client receives the correct position and price.

A firm's own account held in a foreign currency at a bank abroad, used to receive and pay cash in that currency and to fund settlement.

An account that a bank holds for another bank in the holder's own currency, mirroring the correspondent's nostro relationship.

The framework of laws, controls and monitoring designed to detect and prevent the disguising of criminal proceeds as legitimate funds within financial services.

The identification and verification of a client's identity and risk profile before and during a business relationship, forming the core of customer due diligence.

The natural person who ultimately owns or controls a client or the funds involved, identified through ownership thresholds and control tests during onboarding.

A person entrusted with prominent public functions, or a close associate or family member, who is subject to enhanced scrutiny because of higher corruption risk.

Additional checks applied to higher-risk clients or transactions, such as extra identity evidence, source-of-wealth review and senior sign-off, beyond standard measures.

A confidential disclosure made to the financial intelligence unit when a firm knows or suspects money laundering or terrorist financing, usually with a bar on tipping off.

The risk of loss from failed or inadequate internal processes, people, systems or external events, including settlement errors, fraud and processing breakdowns.

A measurable metric, such as failed trades or ageing breaks, tracked to give early warning that operational risk exposure is rising above tolerance.

Documented arrangements, including recovery time objectives and alternate sites, that allow a firm to keep critical operations running during a disruption.

A firm's ability to prevent, withstand, recover from and learn from disruptions, keeping important business services within impact tolerances rather than merely surviving.