The clearing and settlement process involves two primary tasks: trade comparison (matching of trades) and settlement (delivery of securities or book entry). Clearing refers to the calculation of claims of financial institutions against other financial institutions.

In other words, Clearing and Settlement of securities involve delivery of securities and the subsequent or simultaneous transfer of funds to fulfill the contractual obligation arising from the securities trade. As part of the clearing and settlement process the system checks the availability of the securities and blocks them for subsequent transfer in a delivery versus payment mode.

Delivery versus Payment (DvP) is the mode of settlement of securities wherein the transfer of securities and funds happen simultaneously. This ensures both the funds and securities are moved at the same time. DvP settlement is aimed at eliminating settlement risk in transactions. Basically, there are three types of DvP settlements.These are DvP I, II and III which are explained below;

• In the case of DvP I, securities and funds legs of the transactions are settled on a gross basis. The settlements occur transaction by transaction without netting the payables and receivables of the participants.
• With DvP II,  the securities are settled on gross basis whereas the funds are settled on a net basis.  The funds payable or receivable for all transactions of a party within settlement period are netted to arrive at the final net payable or net receivable position which is settled. The securities are settled on transaction by transaction.
• Lastly, with DvP III, both the securities and the funds legs are settled on a net basis and only the final net position of all transactions undertaken by each participant is settled.

Currently, in Ghana, DVP II is applied for Government Securities Settlement. Securities are settled trade for trade and credited or debited directly to the account of the investor whereas funds are settled by a single transfer into the account of the participant at the Bank of Ghana. Settlement is done at the end of the settlement day. The settlement cycle for government securities market is currently T+0.

At the Primary market, once the allotment process in the primary auction is finalized, the successful participants are advised of the amounts that they need to pay to the Government on settlement day. The settlement cycle for government securities auction is T+1. On the settlement date, the fund accounts of the participants are debited by their respective amounts and the securities accounts of individual investors are credited with the allotted securities.

Auction of Government Securities are held on Friday (T) and subsequently settled on Mondays.