Clearing and Settlement refers to the processes that occur after a financial transaction, such as a stock trade, is executed. Clearing involves the confirmation and reconciliation of the transaction details between the buyer and seller, ensuring that both parties agree on the terms. This step is crucial for reducing the risk of errors and fraud. Settlement is the final step, where the actual transfer of securities and funds takes place. In this phase, the buyer receives the securities, and the seller receives the payment. This process typically occurs within a few days after the trade, depending on the market and the type of transaction.