What does the settlement of securities funds mean?

Securities delivery, according to the results of liquidation, the act of performing the contract within the agreed time generally refers to the buyer paying a certain amount of money to obtain the purchased securities, and the seller delivering a certain amount of securities to obtain the corresponding price.

In general, transactions reached through the stock exchange need to be settled on a net basis. Net settlement, also known as difference settlement, means that in a liquidation period, only each net receivable and payable is calculated in the price liquidation of each settlement participant, and only each net receivable and payable is calculated in the securities liquidation.

Extended data

Cargo-bank settlement means that securities registration and settlement institutions and settlement participants pay securities at the time of capital delivery and only at the time of capital delivery, and pay funds at the time of securities delivery. In layman's terms, it means "cash on hand, delivery on hand".

According to the principle of dealing with goods and money, once a settlement participant fails to fulfill the obligation of fund settlement to the securities registration and settlement institution, the securities registration and settlement institution may temporarily refuse to deliver the securities it bought, and vice versa. By transferring funds and securities at the same time, the goods-bank transaction can effectively avoid the risks brought by the default of settlement participants and greatly improve the security of securities trading.

At present, China's securities market has implemented the trading system for some innovative varieties such as warrants and ETFs, but the trading system for old varieties such as A shares, funds and bonds is still in practice.

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