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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 ?
Clearinghouses would not have stopped what happened in 2008: the reevaluation of the same assets by multiple institutions at the same time and selling them to raise cash.
Because the clearinghouses assume and guarantee the risks of the
Much recent regulatory activity has focused on enabling, enhancing, and requiring clearinghouses for these kinds of financing arrangements.
Do you require the use of a clearinghouse for transactions?
Health plans, providers, and clearinghouses that engage in electronic HIPAA transactions must notify patients about their health information privacy practices and inform them of their methods for tracking permissible disclosures.
The Juvenile Justice Clearinghouse, which distributes publications of the Office of Juvenile Justice and Delinquency Prevention and provides customized responses to requests for information
If the consumer or patient is not directed to existing resources, information centers and clearinghouses will be underutilized, and the patient's ability to make informed decisions will be affected.
Clearinghouses in the futures and options markets have developed so-called "crossmargining" agreements intended to reduce credit and liquidity risks on intermarket positions, in one case through obligation netting and in other cases through shared control of positions and collateral.
These liquidity problems and concerns about the clearinghouses might, in turn, have contributed to the break in the arbitrage link between the cash and derivative markets that sent markets into free fall on October 19.

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