Clearinghouse


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Clearinghouse

An adjunct to a futures exchange through which transactions executed on its floor where trades are settled by a process of matching purchases and sales. A clearing organization is also charged with the proper conduct of delivery procedures and the adequate financing of the entire operation.

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.

Clearinghouse.

Clearing corporations, or clearinghouses, provide operational support for securities and commodities exchanges. They also help ensure the integrity of listed securities and derivatives transactions in the United States and other open markets.

For example, when an order to buy or sell a futures or options contract is executed, the clearinghouse compares the details of the trade. Then it delivers the product to the buyer and ensures that payment is made to settle the transaction.

References in periodicals archive ?
Legislation would remove the BA designation from clearinghouses
The legislation would clarify that healthcare clearinghouses, regardless of their original status as a business associate under HIPAA, should be permitted to use and disclose protected health information in the same manner as other covered entities under the HIPAA Privacy Rule.
Citizens' statement explains, "Starting Monday, when a homeowner seeks new homeowners coverage with Citizens, their Citizens-appointed agent will enter their property information into the clearinghouse, which will seek offers of coverage from participating private-market companies.
Fitch says of the clearinghouse launch, "This mechanism should modestly help reduce Citizens' size and could shift more business to Florida-only specialist insurers."
Donations Clearinghouse Manager Jessica Cox Valade said 50 twin-sized mattresses, box springs and frames will be delivered at a time.
In addition to the beds received through the initiative, the Donations Clearinghouse accepts donations of gently used mattresses and box springs from individuals, organizations and corporations.
"The Clearinghouse will be guided by a Steering Committee of representatives of the Syrian people, cooperating states, and regional organizations", it added.
The State Department mentioned that the projects "that could be coordinated via the Syria Accountability Clearinghouse" would aim to train and mentor Syrian investigators/lawyers, human rights actors, and other NGOs/independent actors to collect information about the full range of human rights abuses and violations.
systemic risk: how a clearinghouse could fail to manage a
Why a clearinghouse would likely be subject to the Orderly
As a result, clearinghouses increasingly represent some of the single largest counterparty exposures facing global financial institutions.
Under the stress tests, all clearinghouses examined by the CFTC and ESMA demonstrated the ability to absorb potential losses resulting from the default of their two largest clearing members under extreme market conditions (referred to as the Cover 2 principle).

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