After transactions are concluded on an exchange, it is necessary to calculate who owes what to whom. Clearing offsets mutual claims: if a participant conducted multiple operations during the day, each is not settled separately, but rather the net balance in cash and securities.
This dramatically reduces the volume of actual transfers and lowers risks. A clearing organization acts as an intermediary between parties and ensures fulfillment of obligations, so a participant does not depend on the good faith of a specific counterparty matched by the exchange.
Clearing explains why securities and cash do not arrive instantly: a specified period passes between the conclusion of a transaction and completion of settlement. Due to this cycle, buying a stock to be included in the register for dividends must be done in advance, not on the date of record.
For a retail investor, clearing remains invisible—brokers and infrastructure organizations handle it. It is worth knowing about for understanding timelines: the availability of funds after selling securities is determined by the settlement cycle, not by the broker's application.