Clearing Definition

Forex Glossary

Definition

The term clearing denotes the procedure in which a clearinghouse gets to be a buyer or a seller of a futures contract. Clearing houses take care of the ethics of this market by promising operation of an agency.

Explanation

The use of a clearinghouse is always to keep up the integrity of the futures exchange or market. One of those techniques to attain this objective is by simply strengthening the operation of an agency. The practice of clearing accomplishing this objective within another manner: that the clearinghouse becomes the customer whenever a trader sells a futures contract, and also the clearinghouse becomes the vendor each time a trader wants to get a contract. The expression on average pertains to options and futures .

By dealing with those intermediary roles, the clearing-house supposes the probability of non performance. The cleaning home additionally assumes responsibility for ensuring deliveries happen, compiling balances, recordkeeping, in addition to maintenance of gross accounts. In trade for performing each one these services, the trader will be charged a clearing commission.

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