The final step in the transfer of ownership involving the physical exchange of securities or payment. In a banking transaction, settlement is the process of recording the debit and credit positions of the parties involved in a transfer of funds. In a financial instrument transaction, settlement includes both the transfer of securities by the seller and the payment by the buyer. Settlements can be “gross” or “net.” Gross settlement means each transaction is settled individually. Net settlement means parties exchanging payments will offset mutual obligations to deliver identical items (e.g., dollars or EUROS), at a specified time, after which only one net amount of each item is exchanged.