Clearing Corporation

AAA

DEFINITION of 'Clearing Corporation'

An organization associated with an exchange to handle the confirmation, settlement and delivery of transactions, fulfilling the main obligation of ensuring transactions are made in a prompt and efficient manner. They are also referred to as "clearing firms" or "clearing houses".

INVESTOPEDIA EXPLAINS 'Clearing Corporation'

In order to make certain that transactions run smoothly, clearing corporations become the buyer to every seller and the seller to every buyer. In other words, they take the offsetting position with a client in every transaction.

RELATED TERMS
  1. Settlement Price

    In derivatives markets, the price used for determining profit ...
  2. Confirmation

    1. The occurrence of two or more indicators corresponding with ...
  3. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  4. Delivery Instrument

    A document given to the holder of a futures contact that may ...
  5. Delivery Date

    1. The final date by which the underlying commodity for a futures ...
  6. Clearing Broker

    A member of an exchange that acts as a liaison between an investor ...
RELATED FAQS
  1. What is the haircut rate imposed by clearing corporations?

    A haircut rate is a measure that reduces the value of any collateral used in a loan to ensure that when the effects of volatility ... Read Full Answer >>
  2. What are the Securities and Exchange Commission regulations regarding swaps?

    The U.S. Securities and Exchange Commission (SEC) was granted the authority to regulate security-based swaps (SBS) by Title ... Read Full Answer >>
  3. How does the Private Sector Adjustment Factor (PSAF) affect competition in the private-sector?

    There's no sure way of evaluating the real impact of the private sector adjustment factor (PSAF) on the competitiveness of ... Read Full Answer >>
  4. What does CHIPS UID mean?

    CHIPS UID stands for Clearing House Interbank Payments System Universal Identifier. This is just a fancy name for an electronic ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Principal Trading and Agency Trading

    Ever wonder what happens behind the scenes when you buy or sell a stock? Read on and find out!
  2. Options & Futures

    The 4 Ways To Buy And Sell Securities

    Know the four main avenues of buying and selling investment instruments.

You May Also Like

Hot Definitions
  1. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  2. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  3. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  4. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  5. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
  6. Tangible Net Worth

    A measure of the physical worth of a company, which does not include any value derived from intangible assets such as copyrights, ...
Trading Center