Clearing is the process of transmitting, reconciling and confirming instructions prior to settlement, possibly including the netting of instructions and the establishment of final positions for settlement.
The clearing process completes the trading transaction whereby securities are transferred from the seller to the buyer, and the monetary consideration is transferred from the buyer to the seller.
Two clearing houses operate at the TASE:
· The TASE Clearing House – established in 1966, clears all securities transactions executed on and off the stock exchange. The Clearing House also handles the creation and redemption of mutual fund units and custody of securities, jointly with the Nominee Companies. The Clearing House also carries out payments on behalf of companies: dividends, interest, benefits, exercise of convertibles, exercise of rights, etc. The TASE Clearing House is a member of the Depository Trust and Clearing Company (DTCC) in the United States, the world’s largest clearing house, through which it provides clearing services to dual-listed equities.
· The Derivatives Clearing House – was established in 1993, with the opening of the TASE derivatives market. This clearing house is responsible for clearing options and futures traded on the TASE.
As legal entities, both clearing houses operate as separate companies. However, functionally, they are an inseparable part of the TASE. The clearing houses are operated by TASE employees, use its computer infrastructures and are located on TASE premises.