Back office: the part of a firm that is responsible for post-trade activities.

Central counterparty (CCP), or clearing house: an entity that is the buyer to every seller and the seller to every buyer of a specified set of contracts or obligations.

Central securities depository (CSD): an infrastructure that holds or controls holding of financial instruments in paper or electronic form belonging to all, or a large proportion of the investors in a particular securities market. The CSD effects the centralised transfer of ownership of such securities by entries on its books or records.

Clearing member: a member of a clearing house.

Code of conduct: agreement brokered by the European Commission and agreed in 2006 by the chief executives of European securities trading and post-trading companies with the aim of offering market participants the freedom to choose their preferred provider of clearing services.

Confirmation: the procedure for verifying trade details with a counterparty.

Counterparty: the opposite party in a financial transaction.

Custodian: the party that safekeeps and administers assets on behalf of the owner.

Derivative: a financial contract, the value of which depends on the value of one or more reference assets, rates or indices.

Front office: a firm’s trading unit and other areas that are responsible for developing and managing relationships with counterparties.

International central securities depository (ICSD): an entity that settles trades in international securities and cross-border transactions in various domestic securities.

Interoperability: where one infrastructure service provider – typically a clearing house – creates a business relationship with another. It is the opposite of a “silo” structure, where a clearer may be owned by an exchange.

Netting: an agreed offsetting of positions or obligations by trading partners or participants. Netting reduces a large number of gross positions or obligations to a smaller number and can sharply reduce settlement volumes.

Over the counter: market outside an organised exchange in which transactions are conducted through a telephone or computer network connecting the market participants.

Settlement: the completion of a transaction whereby the seller transfers securities to the buyer and the buyer transfers money to the seller.

Straight-through processing (STP): the capture of trade details directly from front-end trading systems and complete automated processing of confirmations and settlement instructions without the need for manual intervention.

Adapted from “Plumbers and Visionaries: Securities Settlement and Europe’s Financial Market”, Peter Norman, John Wiley & Sons, Ltd (2007)

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