Clearing and Settlement of Derivatives

The use of systems must be accompanied by strict controls and

segregation of certain functions like static data, trade input, client

account set-up, accounting and treasury functions.

Positions in derivatives represent exposures and the positions must

be reconciled to those held by the clearing house or agent broker or,

in the case of a client, their broker. As some products like futures are

not only marked to market each day but that MTM amount is also

settled; any incorrect position will result in problems agreeing the set-

tlement amount. We must also remember that some products go to

physical delivery and ...