Legal Significance
After the trade and before settlement, the rights of the purchaser are contractual and therefore personal. Because they are merely personal, their rights are at risk in the event of the insolvency of the vendor. After settlement, the purchaser owns securities and their rights are proprietary. Settlement is the delivery of securities to complete trades. It involves upgrading personal rights into property rights and thus protects market participants from the risk of the default of their counterparties.
Read more about this topic: Settlement (finance)
Famous quotes containing the words legal and/or significance:
“Narrative prose is a legal wife, while drama is a posturing, boisterous, cheeky and wearisome mistress.”
—Anton Pavlovich Chekhov (1860–1904)
“I am not afraid that I shall exaggerate the value and significance of life, but that I shall not be up to the occasion which it is.”
—Henry David Thoreau (1817–1862)