Inside China’s Securities Clearing System: Complete T-Day to T+1 Data Flow Between SSE, SZSE, ChinaClear and Broker Systems

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Many investors understand stock trading as:

Buy stock

↓

Exchange matches order

↓

Stock arrives

↓

Money is deducted

But inside the securities infrastructure, a single trade must travel through a much more complex chain:

Investor

↓

Broker Trading Platform

↓

Exchange Matching Engine

↓

ChinaClear Clearing System

↓

Securities Registration System

↓

Bank Settlement System

↓

Broker Back Office

↓

Investor Account

The modern securities market is essentially a massive distributed financial transaction system.

The exchange creates the trading result.

ChinaClear creates the final ownership and settlement records.

Brokers maintain customer-facing accounts.

Banks complete the cash movement.

1. The Four-Layer Architecture of China’s Securities Market

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China’s securities infrastructure can be divided into four major layers.

Layer 1: Investor Access Layer

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This includes:

• Mobile trading applications
• Online trading platforms
• Brokerage branches
• Institutional trading terminals
• Quantitative trading APIs

Example:

Investor

↓

Trading App / Institutional Terminal

This layer answers:

How does an investor submit an order?

Layer 2: Broker Core Trading Layer

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Inside a securities company, the architecture usually contains:

Front Office System

        ↓

Central Trading System

        ↓

Risk Control System

        ↓

Cash Management System

        ↓

Clearing System

Before sending an order to an exchange, the broker checks:

Is cash available?

Is the security tradable?

Does the account pass risk control?

Are regulatory limits satisfied?

Only approved orders are forwarded.

Layer 3: Exchange System Layer

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China has two major stock exchanges:

• Shanghai Stock Exchange (SSE)
• Shenzhen Stock Exchange (SZSE)

The exchange is responsible for:

Order receiving

Order matching

Execution

Market data generation

Trade confirmation

The exchange answers:

Did the trade happen?

However:

The exchange is not the final owner registration institution.

Layer 4: ChinaClear Settlement Layer

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China Securities Depository and Clearing Corporation Limited (ChinaClear) manages:

Securities registration

Clearing

Settlement

Investor accounts

Ownership records

ChinaClear answers:

After execution, who legally owns the securities and who receives the money?

2. A Complete Example: One Stock Order

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Assume:

Investor A:

Buy:

1,000 shares

Price:

10 RMB

Investor B:

Sell:

1,000 shares

Price:

10 RMB

Trade value:

10,000 RMB

The complete flow:

Investor A

↓

Broker A

↓

Exchange

↓

Matching Engine

↓

Execution

↓

ChinaClear

↓

Securities Account Update

↓

T+1 Settlement

3. T-Day Morning: Investor Submits an Order

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09:15 — Opening Call Auction

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Investor submits:

Buy:

Stock Code XXXX

Price:

10 RMB

Quantity:

1,000 shares

The app displays:

Order submitted

But internally:

Mobile App

↓

Broker Gateway

↓

Order Management System

↓

Central Trading System

↓

Exchange Connection

The broker creates an order record containing:

Investor ID

Securities Account

Stock Code

Buy/Sell Direction

Price

Quantity

Timestamp

A unique order number is generated.

Example:

202609010000123456

4. T-Day Morning: Exchange Matching

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The exchange receives:

Buy order:

10 RMB

1,000 shares

Sell order:

10 RMB

1,000 shares

The matching engine executes:

TRADE COMPLETED

The exchange creates:

Trade Confirmation

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Including:

Execution Number

Stock Code

Execution Price

Quantity

Execution Time

Buy/Sell Direction

At this moment, two data streams are generated.

Data Stream 1: Real-Time Execution Report

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The exchange sends:

Exchange

↓

Broker Trading System

↓

Investor Application

The investor sees:

Executed

Data Stream 2: Clearing Information

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The exchange sends trade information to:

ChinaClear

ChinaClear receives:

What securities transactions occurred today?

5. T-Day Afternoon: Clearing Begins

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After the market closes, the real backend work starts.

ChinaClear performs clearing calculations.

5.1 Securities Clearing

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ChinaClear calculates ownership changes.

Example:

Buyer:

+1,000 shares

Seller:

-1,000 shares

5.2 Cash Clearing

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ChinaClear calculates payment obligations.

Buyer:

Pays:

10,000 RMB

Seller:

Receives:

10,000 RMB

5.3 Clearing Data Files

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Traditional financial systems often generate end-of-day files:

Trade File

Cash Settlement File

Securities Transfer File

Fee File

These are delivered:

ChinaClear

↓

Broker Back Office

6. Broker End-of-Day Processing

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After receiving clearing data, brokers perform EOD processing.

Typical flow:

Trading System

↓

Clearing System

↓

Cash System

↓

Position System

↓

Customer Account System

The broker updates:

6.1 Customer Positions

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Before:

Investor A

Stock XXXX

0 shares

After settlement:

Investor A

Stock XXXX

1,000 shares

6.2 Cash Balance

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Before:

Cash:

20,000 RMB

Purchase:

-10,000 RMB

Fees:

-5 RMB

Final:

9,995 RMB

6.3 Reconciliation

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The broker must compare:

Broker records:

Trades

Cash

Positions

with:

ChinaClear records:

Settlement Results

They must match exactly.

7. T+1: Final Settlement

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On the next business day:

ChinaClear completes delivery.

Securities Delivery

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Shares move:

Seller Account

↓

Buyer Account

Cash Delivery

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Money moves:

Buyer Funds

↓

Seller Funds

The broker updates:

Available Cash

Available Securities

Trading Limits

8. Why Does China Use T+1 Settlement?

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There are several historical reasons.

Reason 1: Reduce Excessive Speculation

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Without settlement delay:

Buy in the morning

Sell in the afternoon

could create extreme short-term speculation.

Reason 2: Historical Technology Limitations

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Early securities markets relied on:

Manual clearing

Paper certificates

Physical verification

Human reconciliation

Settlement required time.

Reason 3: Reduce Settlement Risk

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Same-day settlement requires:

Real-time ownership transfer

Real-time cash settlement

Real-time risk management

which is technologically more difficult.

9. Securities Market as a Distributed Transaction System

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A single trade affects multiple databases.

Trading Database

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Stores:

Orders

Executions

Trade Status

Securities Database

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Stores:

Ownership Records

Positions

Cash Database

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Stores:

Investor Balance

Payment Obligations

Risk Database

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Stores:

Exposure

Limits

Compliance Status

The whole process resembles distributed transaction processing:

Trade Confirmed

↓

Multiple Systems Must Reach Final Consistency

10. Why Brokers Need Core Middleware

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A modern broker contains many interconnected systems:

Customer Platform

↓

Trading Core

↓

Risk Engine

↓

Cash System

↓

Clearing System

↓

Reporting Platform

If every system directly calls another system:

Problems appear:

High Coupling

Performance Bottlenecks

Failure Propagation

Therefore brokers use:

Message Bus

Event Processing

Queue Systems

Transaction State Machines

Examples from China’s securities technology history include:

Kingstar:

KCBP + KCXP


Hundsun:

AS + AR

These middleware platforms solved:

High-frequency communication

Asynchronous processing

System isolation

Fault recovery

11. Complete T-Day / T+1 Data Flow Diagram

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                 Investor

                    |

                    ↓

            Broker Application

                    |

                    ↓

            Broker Trading System

                    |

                    ↓

          Central Trading Platform

                    |

        ===========================

              SSE / SZSE

        ===========================

                    |

                    ↓

              Trade Records

                    |

                    ↓

               ChinaClear

          +-------------+

          |             |

          ↓             ↓

 Securities Registration   Cash Clearing


                    |

                    ↓

                 Broker

                    |

                    ↓

           Customer Account Update

                    |

                    ↓

                  T+1

12. Compared With the 1980s Paper Stock Era

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1986:

#

Investor

↓

Securities Counter

↓

Manual Registration

↓

Paper Certificate

↓

Company Shareholder Register

1990s:

#

Investor

↓

Broker Branch

↓

Exchange Trading Seat

↓

Exchange Computer System

↓

Settlement Institution

Today:

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Investor

↓

Mobile App

↓

Distributed Broker Platform

↓

Exchange Matching Engine

↓

ChinaClear

↓

Electronic Registration

13. The Real Core of Securities Markets Is Not Trading — It Is Settlement

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People often think:

The most important technology is:

Trading Speed

But for financial markets, the real foundation is:

Every accounting record must finally match.

A trade can fail.

But incorrect ownership records for a market worth trillions can threaten the entire financial system.

Therefore, the true foundation of securities infrastructure is:

Trading System

+

Clearing System

+

Registration System

+

Custody System

+

Risk Management System

Together they form the operating system of the modern capital market.

Next Article

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“Inside China’s Securities Registration System: From Shareholder Cards to Universal Securities Accounts”

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The next article will continue the evolution:

Paper Stock Certificate

↓

Shareholder Card

↓

Shanghai / Shenzhen Securities Account

↓

Universal Account System

↓

Electronic Ownership Registry

It will connect the historical evolution from:

physical certificates → investor accounts → ChinaClear electronic registration system.