What is a Clearing Corporation?

The clearing house, also known as the clearing company, is an independent institution responsible for the settlement, hedging and settlement of futures contracts carried out in futures exchanges. The clearing house is a clearing and settlement structure established with the development of futures trading and the emergence of standardized futures contracts. In the development of futures trading, the establishment of a clearing house perfected the futures trading system. It guarantees that the futures trading can be carried out smoothly in the futures exchange, so it becomes the core of the futures market operation mechanism. Once the futures transaction is reached, the two parties to the transaction have a relationship with the clearing house. The clearing house is both the buyer and seller of all futures contracts.

Clearing company

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The clearing house, also known as the clearing company, is responsible for clearing houses and exchanges.

Like an exchange, a clearing house is usually a non-profit membership organization. The members of the clearing house are usually members who are attached to the exchange. In addition to holding the general member seats of the exchange, they also need to pass stricter financial index requirements than ordinary members. Therefore, the members of the futures exchange are divided into clearing members and non-clearing members. Non-clearing members need to clear through clearing members and pay certain commission fees. All the organizations of futures trading in our country supervise the function of futures settlement. The Exchange has a settlement department as the institution responsible for futures settlement. One of the trends in the integration of global securities markets and futures markets is the increasing number of merger cases between exchanges and clearing institutions.

Some clearing houses are an important part of the exchange (such as the Chicago Mercantile Exchange CME and the New York Mercantile Exchange NYMEX), and some clearing houses are institutions that are independent of the exchange in terms of organization, financial system, operating system, etc. (such as Chicago Futures Exchange (CBOT). Most clearing houses are independent institutions, but there are also cases where several different exchanges use a clearing institution. For example, the International Commodity Clearing House (ICCH) is responsible for clearing most UK futures exchanges, and the inter-market clearing company (The The Intermartet Clearing Corp) clears on the New York Futures Exchange (NYFE) and the Philadelphia Exchange (PBOT).