National Securities Clearing Corporation

Discussion in 'Stocks' started by Deenius, Jan 13, 2020.

  1. Deenius

    Deenius

    I try to understand how the clearing system works in the US stock market.

    I know that the clearing house (NSCC - National Securities Clearing Corporation) is made up of member clearing firms (For example, Electronic Transaction Clearing, Apex Clearing, Wedbush Securities...). I also understand what is multilateral netting.

    What I don't understand is this:

    "The decision to work with multilateral netting led to the formation of the NSCC. Today, this corporation serves as a seller for every buyer, and buyer for every seller for trades that settle in U.S. markets."


    https://www.investopedia.com/terms/n/nscc.asp

    Who is meant by the buyer and the seller? Clearing firms or broker clients? I thought buyers and sellers could also be settled internally within a clearing firm?

    Thank you for any information.