Settlement
Settlement is the process of exchanging money or other assets between two or more parties. It is the final step in a financial transaction, and is the point at which ownership of the asset is transferred from one party to another. Settlement can take place in a variety of ways, including cash, check, wire transfer, or through a clearinghouse. In the case of securities, settlement is the process of transferring ownership of the security from the seller to the buyer.
History of Settlement
The concept of settlement has been around for centuries, and has been used in a variety of contexts. In the early days of trading, settlement was done through barter, where goods and services were exchanged for other goods and services. As the world became more connected, the concept of money was introduced, and settlement became the process of exchanging money for goods and services. With the advent of modern banking and financial systems, settlement became the process of transferring money or other assets between two or more parties.
Comparison of Settlement Methods
| Method | Time to Settlement | Cost |
|---|---|---|
| Cash | Immediate | Low |
| Check | 1-2 days | Low |
| Wire Transfer | 1-2 days | Medium |
| Clearinghouse | 3-5 days | High |
Summary
Settlement is the process of exchanging money or other assets between two or more parties. It is the final step in a financial transaction, and is the point at which ownership of the asset is transferred from one party to another. Settlement can take place in a variety of ways, including cash, check, wire transfer, or through a clearinghouse. For more information about settlement, visit the websites of the Securities and Exchange Commission, the Federal Reserve, or the Financial Industry Regulatory Authority.
See Also
- Clearing
- Payment
- Securities
- Exchange
- Banking
- Financial Transaction
- Asset Transfer
- Wire Transfer
- Check
- Cash
