Settlement finality
The point at which a transfer becomes irrevocable and unconditional, so it cannot be unwound even if a participant fails.
Settlement finality is the moment when a transfer of funds or assets becomes irrevocable and unconditional. IFSB-26, adapting the international principles for financial market infrastructures, calls for a clear legal basis for when finality occurs and for final settlement no later than the end of the value date. For Islamic transactions, the legal point of finality also matters for when ownership and risk pass under the contract.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Value dateThe date on which a payment or transfer is due to take effect and funds become available to the receiver.Delivery versus paymentA settlement mechanism that delivers securities only if payment is made, and makes payment only if delivery occurs.MurabahaA sale at cost plus an agreed, disclosed profit; the seller must own the asset first. Payment is often deferred in instalments.