At which stage in the trading process is cash exchanged for securities?

Cash is exchanged for securities during the settlement stage of the trading process. Settlement is the final step where the transfer of ownership of the securities occurs, and the buyer pays the seller for those securities. It typically follows the execution of the trade, where an order is placed and matched with a counterparty.

During the clearing stage, which occurs prior to settlement, the details of the trade are confirmed, and any necessary adjustments are made to ensure that both parties fulfill their obligations. However, no cash is exchanged at this point; it is more about reconciling and preparing the transaction for settlement.

Confirmation is an intermediary step where both parties receive a record of the transaction details, ensuring accuracy before moving forward, but again, no cash transaction takes place here. Execution is when the buy or sell order is completed; while this does lead to a trade being made, cash is not transferred until the settlement phase.

Therefore, the cash exchange happens specifically at the settlement stage, confirming that this is indeed the correct answer.