Clearing, Settlement, and Post-Trade Operations
This domain tests what happens after the trade: who holds the securities, when obligations must be met, how counterparty risk is contained, and how corporate actions reach the right holder.
Depository and clearing
Securities are dematerialised and held in book-entry accounts at the CSDI. Settlement is delivery versus payment: securities move against funds. A clearing and guarantee arrangement, backed by a guarantee fund, manages counterparty risk so that a defaulting member does not unwind the whole market.
The settlement cycle
The cycle is T+2 business days under current SEO and CSDI rules. Only trading days count, so the Thursday–Friday weekend is skipped. By settlement the buyer must have cleared funds and the seller must have the securities available; brokers block client cash and holdings accordingly ahead of the deadline.
Post-trade processes
Trade confirmation, clearing and netting, settlement instructions, handling of failed deliveries through buy-in and cost recovery, processing of dividends, bonus shares and rights credits, periodic statements, and daily reconciliation between broker records and depository records.
Worked example
A trade executes on Wednesday. The Iranian weekend is Thursday and Friday, so T+1 is Saturday and T+2 is Sunday. Funds and securities must therefore be in place for settlement on Sunday. Counting calendar days would give a wrong Friday answer.
Traps that cost marks
Counting calendar days instead of trading days; assuming the broker is the custodian of record; tying dividend entitlement to the trade date rather than the record date; ignoring that failed delivery triggers buy-in and cost claims.