Clearing corporations

Clearing corporations

Organizations that are affiliated with exchanges and are used to complete securities transactions by taking care of validation, delivery, and settlement.

Clearing Corporation

An agency or corporation on an exchange that settles transactions for a fee. Most exchanges have one or more clearing corporations that are charged with matching orders together, ensuring that delivery is made to the correct party, and collecting margin money. Because so many trades take place on an exchange in a given day, clearing corporations exist to process what each party owes or is owed in a central location so that the fewest securities and the least amount of money actually change hands. For example, suppose that a broker-dealer buys 1,000 shares of a security and then, in a completely separate transaction, sells 700 of the same shares. At the end of the trading day, the clearing house would determine that the broker-dealer must only buy 300 shares as the other 700 belong to another party. Clearing corporations receive a clearing fee in exchange for these services.
References in periodicals archive ?
The amendments propose to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through the Stock Exchanges or Clearing Corporations authorised by the stock exchange or by the Depositories) on one Instrument.
In order to facilitate ease of doing business and to bring in uniformity and affordability of the stamp duty on securities across States and thereby build a pan-India securities market, the Central Government, after due deliberations, in exercise of powers under Entry 91 of the List I and Entry 44 of List III of the 7th Schedule of Indian Constitution, has decided to amend the Indian Stamp Act, 1899 to create the legal and institutional mechanism to enable states to collect stamp duty on securities market instruments at one place by one agency (through Stock Exchanges or Clearing Corporations authorized by it or by the Depositories) on one Instrument and develop a mechanism for appropriately sharing the stamp duty with relevant State Governments.
In the future event of inter-operability of clearing corporations (CCPs), which provides for linking of multiple CCPs while allowing participants to consolidate their clearing and settlement functions at a single CCP, irrespective of the stock exchange on which the trade is executed, stock exchanges can authorize CCPs to collect stamp duty on behalf of state governments.
Entities that are eligible to become Providers include SEBI-registered brokers in IFSC, Foreign Portfolio Investors (Cat I & II) as well as Trading / Clearing Members of International Stock Exchanges / Clearing Corporations that are regulated by a member of Financial Action Task Force (FATF).
Khan, who completed his post-graduate diploma in Business Administration (Finance) at the Maharishi Institute of Management, India in 1997, helmed several financial exchanges and clearing corporations prior to joining Menacorp.
It has been this way since April 4, 2013, when the Securities and Exchange Board of India (SEBI) barred trading on the CSE's online platform C-Star, until the exchange establishes a clearing corporation or ties up with an existing one, in accordance with the Stock Exchanges and Clearing Corporations Regulations, set by the SEBI in 2012.
Clearing corporations have been set up to act as settlement guarantors (so that in case a broker defaults others don't suffer).
To address this, the BSE has set up a clearing corporation and a clearing corporation settlement guarantee fund, which has in excess of Rs 4,500 crore.
The proposed changes include regulating demutualized stock exchanges, derivative exchanges, clearing corporations and fund managers.
In his new role, Dirckx, who will continue to be based in Hong Kong, will lead a regional team managing an existing portfolio of high-profile banks and broker dealer clients, and build up contacts with infrastructure clients, including regional exchanges, central depositaries and clearing corporations. His role will also include developing and executing market advocacy initiatives in the region.
The company likewise utilizes Babel, Bravuras automated financial messaging technology, to link its US offshore intermediary distribution network by the Depository Trust & Clearing Corporations National Securities Clearing Corporation.

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