Clearing corporations, often called depositories, play an important role. First, they ensure prompt payment for securities. Second, they speed up the movement of securities between buyers and sellers and minimize the chance of losing securities.
Today, you will find that most securities, especially shares, are locked up in huge concrete and steel vaults of a clearing corporation/depository where they are safe. That means you probably won't receive a certificate when you buy a stock unless you ask for it. You own it and your account records are your proof of ownership, but you never see it. Instead of being registered to you, the securities are registered to your broker on your behalf. This is called registering your shares in street name. Bonds have recently come to be treated the same way.
A modern clearing corporation/depository uses computers to keep track of all purchases and sales of securities that are immobilized in its vaults. At the end of every trading day, transactions between firms are added up for every security. The depository sends a tab to each dealer of the total amount owed by every other firm. Dealers then settle by sending a cheque to the clearing corporation for deposit in other firms' accounts. Securities are transferred by book or computer entry.
Firms in Canada have three business days to settle the day's stock and most bond transactions. In turn, you also have three days to hand over your securities when you are selling (if you actually have them in your possession), or to pay for them if you are buying.