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Arrangements for Security

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Arrangements for Security

The process of delivering securities or interests in securities, generally in the form of a simultaneous exchange of money, is referred to as settlement of securities. This occurs so that obligations stated in a securities trade contract can be met pt unified trade. Settlement entails the timely delivery of securities and payment as a condition of meeting the trade's delivery commitments.


During the settlement, the parties involved may face a range of risks, just as they would in any business agreement. Clearing, which occurs after trading but before settlement, helps to mitigate these risks. It entails changing contractual responsibilities to make settlement easier, usually through the netting and novation processes.


The actual transportation of paper instruments or certificates was a part of the ancient security settlement techniques. Payments were made using a paper check after the registrar or an agent in charge of the transfer received a receipt. In today's markets, this type of security settlement still exists, but it usually pertains to private or unregistered securities rather than publicly traded securities. This old procedure carries more risk because it is possible to show up for the settlement with forged documents.


The electronic security settlement system arose primarily as a result of clearing and settlement systems in the global security markets. Settlement is done electronically between the participants in an electronic settlement system. If a non-party seeks to settle its interests pt unified trade jakarta, it must do so through a participation custodian. Credit entries are used to track their interests. This is done on the system's operator's securities accounts under their names. This allows for a speedy and efficient settlement while also eliminating the need for paper. This contemporary technological approach is less dangerous and quicker.


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