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What is a clearing house and how does it functions?

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posted Jul 4 by Diya Borda

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A clearing house is an intermediary between buyers and sellers of financial instruments. Further, it is an agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data. Clearing houses act as third parties to all futures and options contracts, as buyers to every clearing member seller, and as sellers to every clearing member buyer.

A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions. By functionality we understand that clearing houses act as a medium for facilitate transactions and aid in settlements.

answer Jul 4 by Debolina Charaborthy
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