Simple English definitions for legal terms
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Stock Clearing Corporation: A company that helps stock market firms exchange stocks and money with each other. It makes sure that everyone gets what they are supposed to and that everything is fair.
A stock clearing corporation is a subsidiary of the New York Stock Exchange that acts as a central agency for securities deliveries and payments between member firms. It helps to ensure that trades are settled properly and efficiently.
For example, if a member firm buys shares of a company from another member firm, the stock clearing corporation will facilitate the transfer of ownership and the payment for the shares. This helps to reduce the risk of errors or delays in the settlement process.
Another example is if a member firm sells shares of a company to an individual investor. The stock clearing corporation will ensure that the shares are properly transferred to the investor's account and that the payment is made to the member firm.
Overall, the stock clearing corporation plays an important role in the functioning of the stock market by helping to ensure that trades are settled accurately and efficiently.