CLEARING Definition

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CLEARING is the process of reporting a trade to ACT for comparison of the details of the transaction between brokers prior to final settlement; the final exchange of securities for cash on delivery. Clearing operations, such as the National Securities Clearing Corporation (NSCC), facilitate the validation, delivery, and settlement of securities transactions. Trades are either reported by the broker to the clearing corporation directly or through a third party, usually another brokerage firm if a broker does not have a direct relationship with a clearing corporation.

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PRIME RATE is the interest rate that banks charge to their preferred customers. Changes in the prime rate influence changes in other rates; mortgage interest rates for example.

UNDERWRITER is a. a banker who deals chiefly in underwriting new securities (investment banker), or b. an agent or financial institution that sells insurance.

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