The Business Process or Capability covering the payments relating to trading activities. It includes agreeing payments, making them, and ensuring that payments are received at the correct times

Detail

Settlement includes:

• Invoicing
• Netting
• Making payments
• Receiving payments
• Margining
• Collateral Management
• Clearing

We also referred to the concept of financial and physical settlement of trades

• Physical settlement involves the delivery of a physical commodity, with a cash payment
• Financial settlement does not involve the delivery of a physical commodity, there is just a cash payment

We need to be careful to recognize the legal definition of settlement of a physical trade:

• The physical part of the trade settles on the delivery date(s)
• The cash part of the trade settles on the Due Date

Most other parts of energy trading businesses identify the term settlement with cash settlement (or payment)