Initiation this is an instruction to make a payment. It needs to

specify the parties, the amount, the denomination, etc. All the

information required to make the payment. The initiation will

authenticate both parties and make sure that the payment

request is valid.



Clearing Once a payment has been initiated, and is validated as

accurate, Clearing needs to occur. The clearing updating of the

accounts of the trading parties. Sometimes this is performed by

an intermediary.



Settlement. This is the actual exchange of money and securities

between the parties. This is when the value actually changes

hands