Banking Knowledge

Question 1

What or who is Cornér Banca?

Answer 1

Cornér Banca is an independent Swiss private bank, active across the whole range of traditional banking services. It specialises in the sectors of private banking, lending, Visa, Mastercard and Diners Club payment cards as well as online trading.

Question 2

Define “Clearing and Settlements”?

Answer 2

In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. This process turns the promise of payment (for example, in the form of a cheque or electronic payment request) into the actual movement of money from one account to another.

Question 3

What are the three processes involved in the transfer of financial instruments, such as stocks?

Answer 3

1. Execution
2. Clearing
3. Settlements

Question 4

What is the “execution” process when transferring financial instruments?

Answer 4

Execution is the transaction whereby the seller agrees to sell and the buyer agrees to buy a security in a legally enforceable transaction.

Question 5

What is the “clearing” process when transferring financial instruments?

Answer 5

Clearing is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities. There are 2 types of clearing: bilateral clearing and central clearing.

In bilateral clearing, the parties to the transaction undergo the steps legally necessary to settle the transaction. Central clearing uses a third-party — usually a clearinghouse — to clear trades.

Question 6

What are Basis Points (BPS or “BIPS”)?

Answer 6

Basis points (BPS) refers to a common unit of measure for interest rates and other percentages in finance. One basis point is equal to 1/100th of 1%, or 0.01%, or 0.0001, and is used to denote the percentage change in a financial instrument. The relationship between percentage changes and basis points can be summarized as follows: 1% change = 100 basis points and 0.01% = 1 basis point.