Clearing Houses

A clearing house acts as an intermediary between parties in financial transactions, such as buying and selling securities or derivatives. Its primary role is to ensure the transaction is completed smoothly and securely by acting as the buyer to each seller and the seller to each buyer. This process reduces the risk of default and guarantees that both parties fulfill their obligations. Clearing houses also handle the collection and management of margin requirements and facilitate the transfer of funds and assets, promoting efficiency and stability in financial markets.