kliiring

Kliiring is the process by which financial obligations arising from trades are reconciled and settled between counterparties. It typically reduces a large bouquet of bilateral commitments to a smaller set of net obligations, enabling the transfer of cash or securities with lower liquidity needs and reduced credit exposure.

Kliiring is performed by clearinghouses or central counterparties and, in some markets, through bilateral arrangements. It covers asset classes such as payments, securities, and derivatives. Settlement can be gross, where each trade is settled individually, or net, where obligations are aggregated and settled as a single net amount.

The usual process includes trade confirmation, novation by a clearinghouse, margining and collateral to cover potential losses, and settlement through a payment system or securities settlement system. For many markets, delivery versus payment ensures that delivery of the asset occurs only if payment is made.

Participants include banks, broker-dealers, clearinghouses or CCPs, custodians, and central banks overseeing system stability. Settlement systems include real-time gross settlement (RTGS) and specialized securities platforms; cross-border activity often involves multi-country infrastructures such as global clearing networks or linked settlement systems.

Kliiring reduces counterparty credit risk through multilateral netting and collateral requirements, but introduces liquidity and operational risks. It is subject to regulation and oversight by national and supranational authorities, with rules governing collateral, default management, and transparency.

Post-crisis reforms have emphasized central clearing for standardized products to improve risk management and market resilience. Kliiring remains essential for maintaining efficiency and stability in modern financial markets, with ongoing efforts to harmonize standards, improve settlement efficiency, and extend central clearing to more product types.