Oppgjørsbank

Oppgjørsbank, often translated as settlement bank, is a financial institution that plays a crucial role in the post-trade processing of financial transactions. Its primary function is to facilitate the transfer of securities and cash between counterparties involved in a trade. This process, known as settlement, ensures that buyers receive their purchased assets and sellers receive their payment, thereby minimizing counterparty risk.

In essence, an oppgjørsbank acts as an intermediary, holding securities in custody and managing the cash movements required to complete a transaction. When a trade is executed, the details are sent to the settlement bank, which then verifies the availability of securities and funds. Upon confirmation, the bank debits the buyer's account for the cash and credits the seller's account, while simultaneously transferring the ownership of the securities. This systematic approach reduces the likelihood of default and enhances the overall stability of the financial markets.

Settlement banks are typically large, established financial institutions with robust infrastructure and strict regulatory oversight. They are instrumental in clearing and settlement systems, which are the frameworks that govern how trades are finalized. The efficiency and reliability of an oppgjørsbank are therefore vital for the smooth functioning of stock exchanges, bond markets, and other financial marketplaces. Their services extend to various types of financial instruments, including equities, bonds, derivatives, and foreign exchange.