Settlement and clearing statements: offering major insights

[Steinberg Mark]

The securities that are traded at the Bombay Stock Exchange (BSE) are classified into different groups. The Pay-in and Pay-out for the A, B1, B2 and C group of securities take place at a faster pace because there are more takers for the best performing stocks. The brokers do not find it difficult to find buyers for the stocks belonging to this group.

Payment of money, delivery of securities and settlement of trade done by the brokers during the weekly trading period from Monday to Friday often takes place in the following week. However, this is not the case with some of the prominently traded stocks. The transaction is completed within a few hours. Most of the time, the brokers find it difficult to meet the demands of the buyers.

However, all deliverables of securities are required to be routed through the clearing house, except for certain off-market transactions, which although are required to be reported to the exchange, may be settled directly between the brokers concerned.

The BSE’s information systems department nets off all deliverable trades (purchases and sales in each scrip) done by a broker during a settlement and generates statements on,
• Delivery/receive orders
• Money statements

Delivery/receive orders offer in depth information on the trends in the stock market in any given working day. The delivery orders provide information on scrip, quantity and the name of the receiving broker to whom the securities are to be delivered through the clearinghouse. The commodities trading firms make use of this information to decide upon the various commodities into which they need to invest to generate more profits.

Money statements from the BSE also give valid clues. The money statement provides details of payments/receipts for the settlements arrived at any trading day.