Clearing and settlement of trades in over the counter markets

A post-trade settlement system for settlement of transactions, comprising a processor configured to perform the steps of:

• receiving from trading parties trade related data identifying executed trades, the data including the counterparties to the trades, the items traded and the price and amount of the trades;
• for each executed trade, matching trade related data received from counterparties to a trade to identify a matched trade between first and second counterparties;
• and novating the matched trade into a first novated trade between the first counterparty and the settlement system and a second novated trade between the second counterparty and the settlement system,
• receiving a request from a counterparty to a novated trade for physical settlement of the trade, the amount indicating the amount to be physically settled;
• determining a first and a second counterparty to the physical settlement;
• moving an equal and opposite position from the settlement system to the first and second counterparties to the settlement request;
• and
• transferring the amount of the physical settlement request from one of the counterparties to the physical settlement request to the other.