Clearing and Settlement
Definition
- A process within the banking system that allows banks to collect or pay out for items drawn on or paid into accounts within their institution. This process enables banks to accept cheques and bank drafts from other financial institutions for deposit. The Canadian Payments Association operates Canada's clearing system.
Synonyms
debts and credits, securities exchange
Acronyms
C&S
Alternate Spellings
Clearing
Related Terms and Acronyms
- Canadian Depository for Securities Limited — Company,
- Agency responsible for the automatic processing and clearing of all securities transactions in Canada.
- Canadian Payments Association (CPA) — Company, Canada,
- This association, which is composed of several financial institutions and the Bank of Canada, operates a national clearing system for financial institution payments.
- Chequing Account — Definition,
- A bank account that allows quick access to the money in the account.
- Electronic Data Interchange (EDI) — Acronym,
- EDI is a system that companies use to exchange business information electronically, virtually eliminating paperwork.
- Large Value Transfer System (LVTS) — Acronym,
- System being created by the Canadian Payments Association that will settle large value payments, possibly $50,000 and over, at the central bank on a same-day basis.
- Onus Item — Definition,
- A payment that is deposited at the same financial institution in which it was drawn or written. For example, a cheque that is written by one bank customer and deposited by the recipient at another branch of the same bank. These items are not cleared between institutions and therefore are not represented in statistics of payments exchanged between financial institutions in the clearings.
- Overdraft Minimum Amount — Definition,
- Minimum amount that will be transferred to the accountholder's account if a potential non-sufficient funds (NSF) situation occurs.
- Payment Clearing and Settlement Act (PSCA) — Acronym, Canada,
- Payment, Clearing and Settlement System (PCSS) — Acronym, Canada,
- Retail Banking — Definition,
- Banking services offered to individual customers such as savings accounts, personal loans, cheque cashing, and RRSPs.
- Savings Account — Definition,
- A financial account that pays interest with low risk.
- Settlement Points — Definition,
- Regional collection points in the clearing and settlement system operated by the Canadian Payments Association. Settlement points forward each bank's regional balance to the Bank of Canada in Ottawa at the end of each day to allow the central bank to adjust the banks' balances with the central bank.
