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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.


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 ?
two options: transfer the portfolios to other clearinghouses through
To reduce the risk of runs in derivatives markets, regulators around the world are poised to require that derivatives trades be carried out through clearinghouses or exchanges.
Specifically, Committee members agree that the most effective approach to reducing systemic risk centers on well-capitalized, closely monitored and effectively regulated clearinghouses comprised of market participants.
Will your system allow direct transmission to payers, or will the services of a clearinghouse be required?
The three clearinghouses are: the National Diabetes Information Clearinghouse, the National Digestive Diseases Information Clearinghouse and the National Kidney and Urologic Diseases Information Clearinghouse.
It is intended to assist health plans, providers, and clearinghouses to establish appropriate safeguards for assuring the integrity and confidentiality of this information.
While some individuals may wish to call these clearinghouses directly, others may not know exactly what information they need or how to obtain it.
Across product groups, separate clearinghouses and depositories have been created for corporate and municipal securities, U.
Lee Barrett, executive director of EHNAC, said, "Per-Se is one of a select group of medical transaction clearinghouses that has demonstrated to independent third-party evaluators its ability to deliver services consistent with the only standards in the industry that measure the overall business practices of a clearinghouse.
All members will belong to local clearinghouses within their respective cities.
For futures contracts on the Standard & Poor's index of 500 stocks (S&P 500) and on the New York Stock Exchange Composite (NYSE) index, the pre-crash margin requirement on existing positions (maintenance margin) provided clearinghouses a lower level of protection against price moves than that provided in the stock (cash) market.
Furthermore, said clearinghouses must be fully accredited by December 2, 2006, to comply with these requirements.

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