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. T+1 (T+2,T+3)

    Abbreviations that refer to the settlement date of security transactions. ...
  6. Settlement Period

    The period of time between the settlement date and the transaction ...
Related Articles
  1. Professionals

    Government Securities Settlement Options

    Regular way transactions in government securities settle on the next business day or T+1. There are however times when either party to the transaction may request an alternative settlement. Other ...
  2. Professionals

    C. Order Tickets

    Prior to executing a customer’s order the representative must fill out the appropriate order ticket and present it to the trading department or wire room for execution.
  3. Professionals

    Settlement of Transactions and Delivery of Securities

    FINRA/NASAA Series 26 Section 8 - Settlement of Transactions and Delivery of Securities. In this section settlement cycle, prompt payment for investment company shares and Delivery of securities.
  4. Professionals

    Corporate And Municipal Securities Settlement Options

    Regular way transactions in corporate stocks and bonds and municipal bonds settle on the third business day or T+3. There are, however, times when either party to the transaction may request ...
  5. Professionals

    Other Exempt Transactions

    FINRA/NASAA Series 63 - Other Exempt Transactions. In this section federal covered securities transactions, transactions between issuer and underwriter, existing owners and of employee stock ...
  6. Investing Basics

    What Are Transaction Costs?

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

    What is a Settlement Date?

    A settlement date is the day a security trade must be settled.
  8. Investing Basics

    Principal Trading and Agency Trading

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

    Offset Risk With Options, Futures And Hedge Funds

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

    Exempt Transactions

    FINRA/NASAA Seriex 66 - Exempt Transactions. This section lists transactions which are exempt according to the USA.
RELATED FAQS
  1. 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 >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. Do I own a stock as of the trade date or the settlement date?

    When it comes to buying shares, there are two key dates involved in the transaction. The first date is the trade date, which ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center