The recent advancements in demand-side management techniques add significant benefits to the distribution systems. One such technique is transactive energy management systems (TEMS) which motivate the energy end-users to take part in local energy trading. The end-users can effectively increase the monetary benefits by trading the surplus generation/demand within the local energy market (LEM). The LEM operator frames a viable market clearing strategy to fix the market clearing price to enhance the monetary benefits of all the market players. In this study, LEM architecture with different market clearing strategies is proposed for TEMS to ensure profitable power transactions between the neighboring end-users. An optimal energy management algorithm is also proposed for time scheduling the operation of flexible loads and batteries, considering dynamics in end-users' behavior, variations in utility parameters, and the intermittent nature of renewable power generation. Further, an optimal load scheduling algorithm is developed at the end-users' premises to improve the profits in the LEM. Correspondingly, the trading strategies are extended to increase market reliability by penalizing participants for their abnormal activities in energy trading. The proposed framework is validated with different case studies considering ten residential participants in a locality. © 2023 S. L. Arun et al.