Definition of Clear

Clear

A trade is carried out by the seller delivering securities and the buyer delivering funds in proper form.
A trade that does not clear is said to fail.

Automated Clearing House (ACH)

A collection of 32 regional electronic interbank networks used to
process transactions electronically with a guaranteed one-day bank collection float.

British clearers

The large clearing banks that dominate deposit taking and short-term lending in the domestic
sterling market.

Clear a position

To eliminate a long or short position, leaving no ownership or obligation.

Clearing House Automated Payments System (CHAPS)

A computerized clearing system for sterling funds
that began operations in 1984. It includes 14 member banks, nearly 450 participating banks, and is one of the
clearing companies within the structure of the Association for Payment clearing Services (APACS).

Clearing House Interbank Payments System (CHIPS)

An international wire transfer system for high-value
payments operated by a group of major banks.

Clearing member

A member firm of a clearing house. Each clearing member must also be a member of the
exchange. Not all members of the exchange, however, are members of the clearing organization. All trades of
a non-clearing member must be registered with, and eventually settled through, a clearing member.

Clearing house / Clearinghouse

An adjunct to a futures exchange through which transactions executed its floor are settled by a
process of matching purchases and sales. A clearing organization is also charged with the proper conduct of
delivery procedures and the adequate financing of the entire operation.

Euroclear

One of two principal clearing systems in the Eurobond market. It began operations in 1968, is
located in Brussels, and is managed by Morgan Guaranty Bank.

Joint clearing members

Firms that clear on more than one exchange.

Market clearing

Total demand for loans by borrowers equals total supply of loans from lenders. The market,
any market, clears at the equilibrium rate of interest or price.

Mortgage-Backed Securities Clearing Corporation

A wholly owned subsidiary of the Midwest Stock
Exchange that operates a clearing service for the comparison, netting, and margining of agency-guaranteed
MBSs transacted for forward delivery.

Automated Clearing House (ACH)

A banking clearinghouse that processes direct
deposit transfers.

Clear Card

A credit card from which payments are deducted over subsequent time periods.

Availability float

Checks deposited by a company that have not yet been cleared.

Book-entry securities

The Treasury and federal agencies are moving to a book-entry system in which securities are not represented by engraved pieces of paper but are maintained in computerized records at the
Fed in the names of member banks, which in turn keep records of the securities they own as well as those they
are holding for customers. In the case of other securities where a book-entry has developed, engraved
securities do exist somewhere in quite a few cases. These securities do not move from holder to holder but are
usually kept in a central clearinghouse or by another agent.

CEDEL

A centralized clearing system for eurobonds.

Chicago Mercantile Exchange (CME)

A not-for-profit corporation owned by its members. Its primary
functions are to provide a location for trading futures and options, collect and disseminate market information,
maintain a clearing mechanism and enforce trading rules.

Delivery price

The price fixed by the clearing house at which deliveries on futures are in invoiced; also the
price at which the futures contract is settled when deliveries are made.

Electronic depository transfers

The transfer of funds between bank accounts through the Automated
clearing House (ACH) system.

Equilibrium rate of interest

The interest rate that clears the market. Also called the market-clearing interest
rate.

Floor broker

A member who is paid a fee for executing orders for clearing members or their customers. A
floor broker executing customer orders must be licensed by the CFTC.

Index warrant

A stock index option issued by either a corporate or sovereign entity as part of a security
offering, and guaranteed by an option clearing corporation.

Netting out

To get or bring in as a net; to clear as profit.

Payment float

Company-written checks that have not yet cleared.

Preauthorized electronic debits (PADs)

Debits to its bank account in advance by the payer. The payer's
bank sends payment to the payee's bank through the _ACH)Automated clearing House (ACH) system.

Yard

Slang for one billion dollars. Used particularly in currency trading, e.g. for Japanese yen since on
billion yen only equals approximately US$10 million. It is clearer to say, " I'm a buyer of a yard of yen," than
to say, "I'm a buyer of a billion yen," which could be misheard as, "I'm a buyer of a million yen."

big bath

A street-smart term that refers to the practice by many businesses
of recording very large lump-sum write-offs of certain assets or
recording large amounts for pending liabilities triggered by business
restructurings, massive employee layoffs, disposals of major segments of
the business, and other major traumas in the life of a business. Businesses
have been known to use these occasions to record every conceivable
asset write-off and/or liability write-up that they can think of in
order to clear the decks for the future. In this way a business avoids
recording expenses in the future, and its profits in the coming years will
be higher. The term is derisive, but investors generally seem very forgiving
regarding the abuses of this accounting device. But you never
know—investors may cast a more wary eye on this practice in the future.

cash flow

An obvious but at the same time elusive term that refers to cash
inflows and outflows during a period. But the specific sources and uses
of cash flows are not clear in this general term. The statement of cash
flows, which is one of the three primary financial statements of a business,
classifies cash flows into three types: those from operating activities
(sales and expenses, or profit-making operations), those from
investing activities, and those from financing activities. Sometimes the
term cash flow is used as shorthand for cash flow from profit (i.e., cash
flow from operating activities).

net income (also called the bottom line, earnings, net earnings, and net

operating earnings)
This key figure equals sales revenue for a period
less all expenses for the period; also, any extraordinary gains and losses
for the period are included in this final profit figure. Everything is taken
into account to arrive at net income, which is popularly called the bottom
line. Net income is clearly the single most important number in business
financial reports.

Direct cost

A cost that can be clearly associated with specific activities or products.

Split-off point

The point in a production process when clearly identifiable joint costs
can be identified within the process.

availability float

Checks already deposited that have not yet been cleared.

payment float

Checks written by a company that have not yet cleared.

Discontinued Operations

Net income and the gain or loss on disposal of a business segment whose assets and operations are clearly distinguishable from the other assets and operations of an entity.

Unencumbered

Property free and clear of all liens (creditors' secured claims).

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