Financial Plumbing Lexicon
A systems-level reference to what happens after a trade is agreed and before money or securities finally arrive: queues, netting, margin, custody, collateral, correspondent accounts and the operational machinery that markets normally hide.
System register
Intraday Credit
Credit available and repaid within the same business day to bridge timing gaps between incoming and outgoing payments.
↗002Daylight Credit
A form of intraday credit used during a payment system’s operating day and normally extinguished before close.
↗003Payment Queue
A holding sequence for payment instructions that cannot yet settle, usually because liquidity or another settlement condition is missing.
↗004Queue Management
Rules and participant actions used to prioritise, reorder, release or cancel queued payment instructions.
↗005Liquidity-Saving Mechanism
An RTGS feature that offsets or coordinates queued payments so participants can settle with less immediately available liquidity.
↗006Gridlock Resolution
A procedure that releases groups of mutually blocking payments by finding a set that can settle together.
↗007Prefunding
Placing cash or eligible value in advance so a future payment or settlement obligation can be completed without relying on incoming funds.
↗008Payment Finality
The point at which a payment transfer becomes unconditional and irrevocable under the applicable system rules and law.
↗009Direct Participant
An institution with its own direct access to a payment, clearing or settlement system and the responsibilities attached to that access.
↗010Indirect Participant
An institution that accesses a financial market infrastructure through a direct participant rather than through its own direct connection.
↗011Operating Window
The period during which a payment or settlement service accepts, processes or settles specified instructions.
↗012Throughput Guideline
A rule or expectation encouraging participants to submit or settle a share of payment value by specified times to reduce late-day concentration.
↗013Novation
The legal replacement of an original contract with a new obligation, often used when a CCP becomes buyer to every seller and seller to every buyer.
↗014Trade Netting
Offsetting multiple trade obligations so fewer or smaller obligations remain for settlement.
↗015Bilateral Netting
Netting obligations between two counterparties to produce a single or reduced bilateral exposure or settlement amount.
↗016Multilateral Netting
Netting obligations across multiple participants so each settles a net position rather than every gross transaction.
↗017Payment Netting
Offsetting payment obligations before settlement to reduce the cash amount that must move.
↗018Position Netting
Combining offsetting long and short positions into a smaller net position for risk management or settlement.
↗019CCP Interposition
The process by which a central counterparty is placed between original trading counterparties and becomes their contractual counterparty.
↗020Loss Allocation
Rules that determine how uncovered losses are distributed after a participant default or other severe infrastructure event.
↗021Margin Period of Risk
The assumed time needed to close, hedge or replace positions after a participant default, used when calibrating margin.
↗022Margin Procyclicality
The tendency for margin requirements to rise sharply during volatile markets, potentially increasing liquidity pressure when funding is already scarce.
↗023Porting
The transfer of a client’s positions and supporting collateral from a defaulting clearing member to another clearing member.
↗024Recovery Tools
Pre-arranged measures an FMI can use to restore financial viability after losses or liquidity shortfalls exceed ordinary resources.
↗025Resolution of a CCP
Authority-led measures for maintaining critical clearing functions or winding down a failing central counterparty without disorderly disruption.
↗026Compression
A process that reduces redundant gross contracts while preserving materially equivalent net risk.
↗027Trade Compression
The termination and replacement of offsetting trades to shrink gross notional and operational complexity without materially changing net exposure.
↗028Fail Chain
A sequence in which one failed securities delivery causes subsequent linked deliveries to fail because the expected securities never arrive.
↗029Book-Entry Transfer
A transfer of ownership or entitlement recorded electronically in accounts rather than through movement of physical certificates.
↗030DvP Model 1
A delivery-versus-payment structure in which securities and funds are settled trade by trade on a gross basis.
↗031DvP Model 2
A delivery-versus-payment structure in which securities settle gross while the corresponding cash obligations settle on a net basis.
↗032DvP Model 3
A delivery-versus-payment structure in which both securities and cash obligations settle on a net basis.
↗033Free of Payment Transfer
A securities transfer completed without a linked cash payment in the settlement system.
↗034Omnibus Account
An account in which assets or positions belonging to multiple underlying clients are recorded together under an intermediary’s name.
↗035Segregated Account
An account structure that separates a client’s assets or positions from those of the intermediary or other clients.
↗036Custodian
An institution that safekeeps financial assets and commonly supports settlement, income collection, corporate actions and recordkeeping.
↗037Sub-Custodian
A local or specialist custodian appointed by another custodian to hold or service assets in a particular market.
↗038Global Custodian
A custodian coordinating safekeeping and asset servicing across multiple markets through its own network and sub-custodians.
↗039Asset Servicing
Post-trade administration of held securities, including income collection, redemptions, tax processing and corporate actions.
↗040Corporate Action Processing
The operational workflow for identifying, communicating, electing and settling issuer events that affect security holders.
↗041Rehypothecation
The reuse by a collateral taker or intermediary of assets that were originally received as collateral, subject to legal and contractual rights.
↗042Tri-Party Agent
An intermediary that administers collateral selection, valuation, substitution and settlement between two financing counterparties.
↗043Specials
Securities trading in repo at unusually low rates because the specific collateral is in strong demand relative to available supply.
↗044Securities Borrowing
Obtaining securities temporarily against collateral or a fee, typically to facilitate settlement, short positions or market making.
↗045Securities Lending Recall
A lender’s instruction requiring previously lent securities to be returned, often ahead of sale, voting or another asset event.
↗046Loro Account
A correspondent account described from the perspective of a third bank; terminology depends on which institution is viewing the account relationship.
↗047Payable-Through Account
A correspondent arrangement allowing customers of the respondent bank to conduct transactions through an account held at another bank.
↗048Cash Correspondent
A bank that provides another institution with cash-account and payment services in a currency or market where direct access is unavailable.
↗049Cover Payment
A correspondent-banking payment method in which the customer instruction and the interbank funding transfer travel through separate message paths.
↗050Serial Payment
A cross-border payment method in which the payment instruction and funds move together through successive correspondent banks.
↗051Intermediary Bank
A bank positioned between the ordering and beneficiary institutions to route, fund or settle a payment.
↗052Beneficiary Bank
The institution that receives a payment for credit to the beneficiary or makes the proceeds available to that beneficiary.
↗053Ordering Bank
The institution that initiates a payment instruction on behalf of the ordering customer.
↗054Cross-Border Payment Chain
The sequence of institutions, accounts, messages and settlement steps used to move funds between jurisdictions.
↗055Liquidity Bridge
An arrangement that connects liquidity across accounts, systems, entities or currencies so funding can be mobilised where settlement is due.
↗056Time-Zone Risk
Funding and settlement risk created when linked markets or payment systems operate at different times and obligations cannot be completed simultaneously.
↗057Inventory Financing
Funding used by dealers to carry securities inventory between acquisition and sale or distribution.
↗058Warehouse Risk
Market and funding exposure accumulated while an intermediary holds positions before they can be distributed, hedged or securitised.
↗059Internalisation
Execution or settlement of flows inside an intermediary’s own books or network rather than routing every transaction to an external venue or infrastructure.
↗060Trade Internalisation
Matching or executing client trading interest within a dealer or platform rather than sending both sides to an external market.
↗061Prime Brokerage Financing
Funding and balance-sheet services supplied by a prime broker to clients, commonly against securities collateral and trading positions.
↗062Quarter-End Balance-Sheet Effect
Changes in dealer pricing, repo capacity or intermediation around reporting dates as institutions manage measured balance-sheet exposures.
↗063Liquidity Transformation
The creation of more liquid claims against assets or positions that are less liquid, longer-dated or harder to monetise quickly.
↗064Trade Capture
The recording of an executed transaction in a firm’s operational systems with the fields required for downstream processing.
↗065Allocation
The post-trade assignment of an executed block trade across the underlying funds, accounts or beneficial owners.
↗066Reconciliation
The comparison of records held by different systems or institutions to identify and resolve discrepancies.
↗067Cash Reconciliation
Matching internal cash records against bank, custodian or settlement-account records to detect missing or incorrect movements.
↗068Position Reconciliation
Comparing recorded security or derivatives positions across counterparties, custodians, clearing systems or internal books.
↗069SSI
Standing settlement instruction: pre-agreed account and routing details used repeatedly to direct settlement of trades.
↗070Exception Management
The identification, investigation and resolution of transactions that fail automated processing rules or contain mismatched data.
↗071Failed Trade Management
Operational processes used to investigate, repair, fund, communicate and ultimately settle transactions that missed their intended settlement date.
↗072Trade Lifecycle
The sequence from execution through capture, confirmation, clearing, settlement, servicing and eventual termination or maturity.
↗073STP
Straight-through processing: automated movement of transaction data through successive processing stages with minimal manual intervention.
↗074Nostro Account
An account a bank holds with another bank, typically in a foreign currency, viewed from the account-owning bank’s perspective.
↗075Vostro Account
An account a bank maintains on behalf of another bank, viewed from the account-servicing bank’s perspective.
↗076Standing Settlement Instruction
Pre-agreed settlement routing and account details reused for recurring transactions with a counterparty or market.
↗077Settlement Instruction
The operational message specifying where, when and how cash or securities should be delivered for settlement.
↗078Clearing Fund
A pool of prefunded resources contributed by clearing participants that can absorb losses or liquidity pressure following a participant default.
↗079Default Waterfall
The ordered sequence of financial resources a CCP can apply when losses from a clearing-member default exceed that member’s margin.
↗080General Clearing Member
A clearing member permitted to clear transactions for clients or other market participants as well as for itself.
↗081Direct Clearing Member
A participant that clears directly at a CCP rather than relying on another clearing member for access.
↗082Collateral Velocity
A measure or concept describing how frequently collateral is reused or mobilised through financing and settlement chains.
↗083Collateral Chain
A sequence of transactions in which the same or economically linked collateral supports multiple funding or market obligations.
↗084Collateral Reuse
The use of received collateral in a subsequent transaction where legal and contractual arrangements permit it.
↗085Collateral Transformation
Exchanging or financing one asset to obtain collateral of a type or quality required for another obligation.
↗086Trade Repository
A central recordkeeping infrastructure that collects and maintains transaction data, particularly for derivatives markets.
↗087Transaction Reporting
The regulatory or market-infrastructure process of submitting prescribed transaction details to an authorised recipient or repository.
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