clearing house

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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 house

A corporation established by an exchange in order to facilitate the execution of trades by transferring funds, assigning deliveries, and guaranteeing the performance of all obligations. See also clearing-house statement.
References in periodicals archive ?
Clearing houses are intermediaries between buyers and sellers for financial assets and Brexit has led to calls to move the clearing houses away from London to other nations in the eurozone.
The clearing house was launched during the financial crisis, just as the importance of central clearing was becoming even more evident.
Under the regulations, initial and ongoing financial resource requirements for a clearing house, based on current and future risk evaluation of the clearing house's operations, have been prescribed given the critical functions being performed by a clearing house.
To counter the stringency arising from reserve money being "hoarded," Cannon explained, clearing houses began the practice of issuing CHLCs, which were based on short-term paper deposited by the borrowing banks as collateral.
The exchange and clearing house will transition from existing technology to the ICE trading and clearing platforms in due course.
Britain announced at the beginning of August that it would give its regulators new powers to wind down failing clearing houses, saying that similar EU moves were too slow to arrive.
Global Banking News-September 11, 2014--ICE to acquire majority stake in Holland Clearing House
5 February 2013 - SGX, the Singapore stock exchange, is holding talks about buying a stake in UK clearing house LCH.
Barclays has worked closely with multiple clearing houses to develop and meet client demand for an enhanced LSOC with Excess model, which allows client-specific excess value to be used to cover margin requirements, including a client s variation loss.
ISLAMABAD -- The Securities and Exchange Commission of Pakistan (SECP) has invited public comments on the draft Clearing Houses (Licensing and Operations) Regulations, 2016, and for this purpose, has published the said regulations in the official gazette.

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