In general, the settlement of a liability; the closing of an account by payment. – In the case of the purchase or sale of securities, the delivery of the securities or the payment for the securities received (security sales or purchases are completed by the delivery of cash or securities, respectively). – In the case of an option contract, the delivery of the underlying security or settlement by cash. This corresponds to the difference between the strike price and the price of the underlying security on the date specified in the contract. – See agreement, hedging relationship, financial instrument, claim mismatch, delivery, physical, complex option, option, position, weak, residual value, commodity futures contract, balance payment, indemnity obligation, spread, cancellation, availability premium, replacement risk. – Cf. the definitions in the ECB’s Monthly Bulletin of May 2000, p. 42.
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