SCCP is responsible for establishing the cash and securities liabilities and entitlements of its Clearing Members, synchronizing the settlement of funds and the transfer of securities based on the Delivery-versus-Payment Model 3 or Multilateral Net Settlement; guaranteeing the settlement of trades in the event of a trading participant's trade default in order to ensure the finality and irrevocability of all Exchange trades through its Fails Management procedures; and implementing appropriate risk management measures to mitigate risks in the clearing and settlement of Exchange trades and the maintenance and administration of the Clearing and Trade Guarantee Fund ("CTGF").
The transfer of equity securities is implemented via electronic book entry at the central securities depository. If the security intended for trading is not yet in book-entry form, it needs to be immobilized first so the securities settlement of PSE trades can be done via book-entry debits and credits at the depository. Cash settlement is effected through net debits and net credits to the Clearing Members' cash settlement accounts with the settlement banks. All PSE trades in listed securities are reported, confirmed and settled through SCCP on a Clearing Member level (not beneficial customer level).
SCCP as the Central Counterparty
Upon uploading of the PSE Trades into SCCP's Central Clearing and Central Settlement system, multilateral netting takes place, and novation of the original PSE Trade contracts occurs. The securities settlement instructions are netted multilaterally into a net receipt or delivery position in a given security for each Clearing Member. All cash debits and credits from these securities settlement instructions are also netted into a single net cash position for each Clearing Member. On settlement date, book-entry settlement instructions will be created for each net position to facilitate movements from the net delivering Clearing Members to the net receiving Clearing Members.

As a result of novation, SCCP becomes a Central Counterparty ("CCP") to all matched trades executed at the Philippine Stock Exchange. As a CCP, SCCP assumes the role of a seller to all net buying Clearing Members and the buyer to all net selling Clearing Members. Thus, SCCP as the Central Counterparty takes the buyer's credit risks and assumes the seller's delivery risks, thereby addressing settlement concerns for market participants.
Delivery versus Payment
The settlement of trades of listed securities takes place three business days after the transaction date or on T+3 on a Delivery-versus-Payment Multilateral Net Settlement basis. As such, cleared funds must be deposited in the Clearing Member's cash settlement account in the settlement bank and securities must be made available in the Clearing Member's securities accounts in the central depository's system not later than 12:00 noon of settlement date. If the securities are not delivered by the selling Clearing Member, the Clearinghouse will not release the corresponding cash entitlement to him, and vice versa. Late deliveries are imposed a monetary fine/penalty by the Clearinghouse.