Pairoff

DEFINITION of 'Pairoff'

1. A purchase of securities to offset a previously transacted sale of the same security.

2. A transaction in securities markets where off-setting buy and sell trades are settled in cash, based on the difference in the prices between the off-setting trades. No securities trade hands; instead the settlement difference between the trades is calculated, and a money wire is sent to the appropriate party.

BREAKING DOWN 'Pairoff'

1. The offsetting position is usually transacted within the same day of the original purchase. This is also referred to as crystallization.

2. Matching trades for pairoff can reduce settlement risks and security wire transfer fees. It is ultimately a form of speculation.

RELATED TERMS
  1. Offsetting Transaction

    In trading, an activity that exactly cancels the risks and benefits ...
  2. Closing Offset (CO) Order

    A limit order that allows the purchase or sale of a security ...
  3. Cash Transaction

    A transaction that is settled with cash on the same day as the ...
  4. Offset

    1. To liquidate a futures position by entering an equivalent, ...
  5. Cylinder

    A term used to describe a transaction, involving two derivatives, ...
  6. T+1 (T+2,T+3)

    Abbreviations that refer to the settlement date of security transactions. ...
Related Articles
  1. ETFs & Mutual Funds

    What is a Settlement Date?

    A settlement date is the day a security trade must be settled.
  2. Managing Wealth

    Offset Risk With Options, Futures And Hedge Funds

    Though all portfolios contain some risk, there are ways to lower it. Find out how.
  3. Investing

    What Are Transaction Costs?

    Transaction costs are expenses incurred from buying or selling securities.
  4. Investing

    Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  5. Trading

    How The Straddle Rule Creates Tax Opportunities For Options Traders

    This rule allows traders to substantially reduce their risk, and possibly benefit on their tax returns as well.
  6. ETFs & Mutual Funds

    The 4 Ways To Buy And Sell Securities

    Know the four main avenues of buying and selling investment instruments.
  7. Personal Finance

    What You Need To Know About Capital Gains And Taxes

    Find out how your profits are taxed and what to consider when making investment decisions.
  8. Personal Finance

    Best Ways to Send Large Sums of Money Abroad

    Understand why it may be difficult to send large sums of money internationally. Learn about the top five ways to send large sums of money abroad.
  9. Investing

    Understanding Related-Party Transactions

    In business, a related-party transaction refers to a transaction where parties on both sides have a common interest or relationship.
  10. Trading

    What is the Difference Between Institutional Traders and Retail Traders?

    The differences between retail and institutional traders lie in the size of the trade, level of sophistication, and the speed of transactions.
RELATED FAQS
  1. Can I use my capital loss to offset taxes?

    I have a capital loss from the sale of my parent's home. Is it was wise to convert my 401k funds to regular savings, ... Read Answer >>
  2. What do T+1, T+2 and T+3 mean?

    Whenever you buy or sell a stock, bond or mutual fund, there are two important dates of which you should always be aware: ... Read Answer >>
  3. When is a share purchase marked as 'settled' by a brokerage?

    Understand the process of purchasing stock, including ordering, clearing and settlement, and learn when a stock trade is ... Read Answer >>
  4. What are the characteristics of a marketable security?

    Find out what it takes for a financial asset to be considered a marketable security, including its liquidity, intent of use ... Read Answer >>
  5. What's the difference between primary and secondary capital markets?

    Learn how in the primary capital market, securities are issued for the first time, while in the secondary market, investors ... Read Answer >>
  6. How are arm's-length transactions determined by law?

    Determine if transactions are conducted at arm's length by checking if the parties to a contract are independent and transact ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center