WHAT IS THE CLEARING CORP.?
The Clearing Corp. is a clearing house for trading activity, protecting the integrity of the market. It acts as the buyer to every seller and the seller to every buyer, allowing each trader to buy and sell independently. For example, a trader who bought a futures contract today but decides to sell the contract later doesn’t have to worry about whether the original seller wants to buy it back. At the end of each day, the Clearing Corp. matches purchases and sales. Gains are paid from the accounts of clearing member firms incurring losses. Losses require the additional deposit of funds before the start of the next day’s trading. The books are balanced daily so that each trading session represents a clean start, with no money owed and no money due.
Related Questions
- Why for some classes does the volume on the OptSum file not always add up to what is published by the OCC (Options Clearing Corp)?
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- Who is Seaport Securities Corp. clearing firm?
