All Euronext securities transactions begin with a trade through a European exchange on either
the electronic order book
a multilateral trading facility (MTF)
or in the OTC (over-the-counter) markets
Clearing is performed by a central counterparty (CCP), which guarantees both sides of the trade, thereby mitigating counterparty risk. The CCP acts as a buyer to every seller and a seller to every buyer in a transaction, stepping in to complete a trade if one party defaults – a process called novation.
The CCP puts together all the trades in a given security to generate a single net settlement instruction.
Settlement, the final link in the change-of-ownership process, occurs at a central securities depository (CSD) through the delivery-versus-payment (DVP) process.