State whether this statement is True or False:“An important step in the Clearing Process for Derivatives is determining what counterparties owe and what they are due to receive on the settlement date.”

Practice question from NISM Series VII Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

True

Correct answer
B

False

Why this is the answer

The clearing process establishes each party’s obligations and entitlements before settlement. The Clearing Agency performs this function with assistance from clearing banks and depositories.

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NISM Series VII Mock Test 4