Last updated on July 16th, 2025 at 02:45 pm
Clearing and settlement is one of the important processes involved in the entire trade life cycle process with investment banks. However its important for you to understand, how to prepare for this interview.
In this blog I will take you through the job description, important areas of testing for this job role.
Clearing & Settlement Analyst Job Profile
Let me start by showing you the specific Job description of Clearing and settlement analyst at Deutsche Bank.
Responsibilities
Below are mentioned various responsibilities that you need to execute as an analyst on a daily basis.
• Preparing and verifying swift instructions to our custodian agent as required
• Repairing incorrect client instruction.
• Resolving problems arisen from unmatched items and implement long term solutions for frequently occurred issues
• Preparing pending trades report and communicate with custodian agent to identify settlement issues over telephone or via provided systems
• Identifying cash or any other discrepancies to our books & records and following up till resolved
• Supporting client services team to resolve problem for client in terms of settlement issue.
• Assist in creating proper backups through adequate cross training, within the department
• Escalate all issues properly, in time, to the appropriate level, to avoid any adverse impact on the business
• EOD control reports as per procedures
So, there might be a chance that you might have not understood what this role entails.
Simplifying this:
- Ensuring both the buyer and seller of security complete the trade without failures
- Secondly making sure that the seller has the security to transfer
- Thirdly the buyer has the cash to pay for the security
- Reporting and finding root causes of a failed trade.
Knowledge & Interview Expected Questions Clearing & Settlement
So, now that you know what the job entails, now you need to understand what is the knowledge required. Which will be tested in the intial rounds.
Trade Life Cycle Process Related Questions
Here are the answers and explanations for each of your listed interview questions:
Explain the full trade lifecycle from trade execution to settlement.
Answer:
The trade lifecycle consists of the following key stages:
- Trade Execution – The trade is initiated on an exchange or OTC (e.g., buy/sell of a security).
- Trade Capture – Details are recorded in the front-office system and sent to middle/back-office.
- Trade Enrichment – Additional fields (e.g., settlement location, counterparty info) are added.
- Trade Validation & Matching – Trades are confirmed with the counterparty; any mismatches are resolved (often using systems like Omgeo CTM or SWIFT).
- Clearing – The process of calculating net obligations (who pays what and to whom), and guaranteeing the trade (via clearing house).
- Settlement (T+1/T+2) – Final delivery of securities and cash:
- T+1 means settlement occurs one business day after trade date.
- T+2 (e.g., for equities in India) means two business days after trade date.
What is the difference between clearing and settlement?
Answer:
| Clearing | Settlement |
| Involves confirming, matching, and netting trades | Final exchange of securities and payment between parties |
| Performed by a clearing house (e.g., NSCCL, Euroclear) | Involves custodians, CSDs like NSDL, or brokers |
| Ensures trade integrity and risk mitigation | Ensures delivery of what was agreed in the trade |
How do you handle a failed trade?
Answer:
Handling a failed trade involves the following steps:
- Identify the cause: e.g., short stock, unmatched instructions, insufficient cash.
- Investigate promptly: Review STP (Straight Through Processing) logs, client instructions, and custodian feedback.
- Correct & reprocess: Amend instructions or arrange funding/securities to reattempt.
- Escalate if unresolved: Inform internal teams and counterparties.
- Monitor for penalties: Especially under regimes like CSDR in the EU which penalize settlement fails.
What is a record date and ex-date in a corporate action event?
Answer:
- Record Date: The date the company checks its shareholder register to determine who is eligible for the corporate action (e.g., dividend, rights).
- Ex-Date: The first trading date after which new buyers do not receive the entitlement. Typically, it’s 1 business day before the record date in T+1 markets.
Answer:
The seller is entitled to the dividend because they were the owner of record on the record date, and the ex-date is the cutoff.
Buyers who purchase on or after the ex-date are not eligible.
Let me know if you’d like this in tabular form or as a printable reference sheet for interview prep.
Corporate Actions Questions:Clearing & Settlement
| Interview Question | Answer |
| What are corporate actions? Can you name some types? | Corporate actions are events initiated by a company that affect its securities. Examples: dividends, mergers, rights issues, stock splits, bonus issues. |
| What is the difference between mandatory and voluntary corporate actions? | Mandatory: executed without shareholder input (e.g., dividends). Voluntary: require shareholder action (e.g., rights issues, tender offers). |
| How does a stock split impact the settlement process? | It adjusts the number of shares and price per share; back-office systems must update positions and open trades accordingly. |
| What is the role of a clearing and settlement analyst during a rights issue? | Ensuring entitlements are correctly calculated, instructions collected from clients, and positions updated post-allotment. |
| What risks are associated with processing corporate actions? How would you mitigate them? | Risks: miscommunication, deadline misses, incorrect postings. Mitigations: checklist usage, dual review, automated alerts. |
| Explain the full trade lifecycle from trade execution to settlement. | Execution → Trade capture → Confirmation → Clearing → Settlement (T+1/T+2), where securities and cash are exchanged. |
| What is the difference between clearing and settlement? | Clearing: matching and confirmation of trades. Settlement: actual exchange of securities and cash. |
| How do you handle a failed trade? | Investigate the root cause (e.g., mismatch, short position), contact counterparty, and arrange for rebooking or penalties. |
| What is a record date and ex-date in a corporate action event? | Record date: holder eligibility cutoff. Ex-date: date on or after which buyers are not entitled to the action benefit. |
| If a client sells shares on the ex-dividend date, who is entitled to the dividend? | The seller is entitled, as they held the shares on the record date. |
Advance Process Oriented Questions:Clearing & Settlement
Here are the answers and explanations for each of your listed corporate actions-related questions:
1. What are SWIFT messages used in corporate actions?
Answer:
SWIFT messages standardize communication between financial institutions during corporate actions. Key message types include:
| Message Type | Purpose |
| MT564 | Corporate Action Notification |
| MT565 | Corporate Action Instruction (e.g., voluntary events) |
| MT566 | Corporate Action Confirmation (e.g., allocation or payment confirmation) |
| MT567 | Status and processing update |
💡 These messages ensure consistent and automated communication between custodians, depositories, and banks.
2. How do you reconcile corporate action entitlements with actual positions?
Answer:
To reconcile:
- Step 1: Obtain the entitlement file from the depository or custodian (e.g., Euroclear).
- Step 2: Compare entitlement quantity (based on record date holdings) with internal client positions in the custody/settlement system.
- Step 3: Investigate mismatches (due to unsettled trades, incorrect positions, etc.).
- Step 4: Adjust records or raise claims as needed (especially in voluntary or dividend events).
✔ This ensures clients receive the correct quantity/value from the corporate action.
3. What is a pay date? What happens if the pay date falls on a non-business day?
Answer:
- Pay Date: The date on which corporate action proceeds (e.g., dividends, interest, cash, or securities) are credited to shareholders’ accounts.
- If it falls on a non-business day:
- The payment is usually deferred to the next valid business day.
- Some markets adjust this automatically; others may issue a revised pay date.
4. How do you prioritize multiple events on the same security (e.g., dividend and stock split on the same day)?
Answer:
- Follow market-provided sequencing or custodian instructions.
- General priority order:
- Stock Split or Bonus Issue – Adjusts positions first.
- Dividend – Calculated on the adjusted position post-split.
- Use event hierarchy logic in corporate action processing systems.
- Ensure downstream systems reflect the correct entitlement sequence to avoid calculation errors.
5. What systems or tools have you worked with in processing corporate actions?
Answer:
Some common industry platforms and depositories used for corporate actions include:
| System / Platform | Function |
| Euroclear / Clearstream | International central securities depositories (ICSDs) handling global entitlements |
| CREST (UK) | UK’s central settlement system for securities |
| DTCC (US) | Central depository in the U.S. for securities and corporate actions |
| Bloomberg / SWIFT Alliance | To receive notifications (MT564), manage elections (MT565), and confirmations (MT566) |
| Custodian Portals | Proprietary tools from custodians (e.g., BNY Mellon, Citi) |
| Internal systems (e.g., Calypso, TCS BaNCS, Murex) | For entitlement reconciliation and event tracking |
Let me know if you’d like these formatted into a visual table or document for interview preparation or training.
Scenario-Based and Problem Solving Clearing & Settlement
1. You received a late instruction from the client for a voluntary event that has already closed. What do you do?
Answer:
- Inform the client immediately that the event deadline has passed.
- Contact the custodian or depository to check if an exception can still be processed (rare).
- Log the incident, explain implications to the client, and escalate internally.
- Use the case as a learning point to improve cut-off reminders and client communication.
2. A dividend was incorrectly paid to a client. How would you handle the correction process?
Answer:
- Identify the root cause: incorrect position, duplicate entitlement, or system issue.
- Notify internal control and reconciliation teams.
- Contact the client with details and begin recovery (recall or offset in next payment).
- Work with custodian if the issue lies externally. Document the case for audit trail.
3. How would you ensure accurate communication between internal teams (e.g., front office) and custodians for a corporate action?
Answer:
- Use standardized templates and pre-approved instruction formats.
- Maintain a central tracker for live corporate actions.
- Set up automated alerts or daily meetings during event-heavy periods.
- Confirm instructions are acknowledged by custodians and all teams are aligned on positions and deadlines.
4. What steps do you take to ensure no corporate action is missed during your shift?
Answer:
- Monitor corporate action feeds from custodians and depositories.
- Maintain and update an internal tracker or workflow system.
- Use tick-off checklists and alert systems.
- Conduct a formal handover to the next shift with pending actions and open items.
- Perform reconciliation of entitlements versus positions regularly.
5. How do you manage a high-volume day with multiple critical events and tight deadlines?
Answer:
- Prioritize events by value, criticality, and market deadline.
- Allocate team resources based on complexity (voluntary > mandatory).
- Use checklists and workflow tools to avoid misses.
- Stay in constant communication with clients, internal teams, and custodians.
- Escalate potential bottlenecks early to avoid end-of-day rush.
Knowledge of Regulatory and Market Practices
What is T+1 settlement? What impact does it have on processing corporate actions?
Answer:
- T+1 means trade settlement occurs one business day after the trade date.
- Impact: Reduces buffer time for reconciliation and entitlement capture.
- Requires faster instruction processing and higher operational efficiency.
How does a merger affect outstanding trades and positions?
Answer:
- Outstanding trades in the old entity may need to be canceled or settled with conversion into new shares.
- System updates are required for security identifiers (ISINs).
- Clients must be informed about changes in entitlements and cash/stock proceeds.
- Corporate actions must handle fractional shares, if applicable.
What is the role of a depository in corporate action processing?
Answer:
- Acts as the record keeper of securities and processes entitlements on behalf of issuers.
- Provides corporate action notices and confirms instructions (e.g., NSDL, Euroclear).
- Ensures correct allocation of benefits and coordinates with custodians and brokers.
How do you handle tax withholding on dividends for international clients?
Answer:
- Identify residency of clients based on tax documentation (e.g., W-8BEN).
- Apply correct withholding tax rate based on DTA (Double Taxation Avoidance Agreement).
- Withhold tax at source and remit to the tax authority.
- Provide clients with tax vouchers or certificates for reclaim.
What are the implications of incorrect corporate action processing in terms of financial and reputational risk?
Answer:
- Financial risk: Overpayment/underpayment, penalties, or compensation costs.
- Reputational risk: Loss of client trust, audit failures, and potential regulatory scrutiny.
- May also lead to regulatory reporting issues and internal policy violations.
Video Tutorial
Certifications and Courses that Help
- NISM Series VI (Depository Operations)
- NSE Academy Clearing & Settlement Certification
- Certified Investment Banking Operations Analyst Course
- – Internal trainings or courses on SWIFT, trade lifecycle, and market operations
Resume Tips for Clearing & Settlement Roles
– Use terms like: ‘Trade settlement’, ‘Custody operations’, ‘Corporate actions’, ‘SWIFT messaging’ in your skills section in resume
– Highlight projects involving reconciliation or back-office systems
– For freshers: Showcase certifications and domain awareness
Final Tips Before the Interview
– Read financial market news (RBI, SEBI, global settlement reforms)
– Understand compliance basics: KYC, PMLA, FATCA
– Practice mock interviews and revise key terms
