Electronic Trading Clearing
China - Shanghai Stock Exchange |
China - Shenzhen Stock Exchange |
National Stock Exchange (NSE)
What is Clearing?
In banking and finance, clearing denotes all activities from the time a transaction is made until it is finally settled (see settlements). Some of the activities in clearing are reporting/monitoring, risk margining, netting of trades to single positions, tax handling, and failure handling. Clearing only involves electronic transactions.
In its wider sense clearing involves the management of post-trading, pre-settlement credit exposures, to ensure that trades are settled in accordance with market rules, even if a buyer or seller becomes insolvent prior to settlement.
Central counterparty
Clearing generally involves the use of a well capitalised financial institution known as a central counterparty (CCP). The CCP becomes a party to every trade, acting as buyer to market participant sellers, and seller to market participant buyers. In respect of unsettled trades, market participants therefore bear the standardised credit risk of the CCP, and not that of each other in a decentralised market.
In the United States, interbank clearing is done through the Automated Clearing House (ACH). Its rules and regulations are set by the National Automated Clearing House Association and the Federal Reserve. The ACH network acts as central clearing facility for all Electronic Fund Transfer (EFT) transactions.
Netting
The CCP can net its daily purchases and sales in like securities since each market participant has only one counterparty to its trades. Such netting is widely identified as the key benefit offered by the use of a CCP.
This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Clearing (finance) "
Asia Clearing Houses
ASX Settlement and Transfer Corporation (ASTC)
- Clearing House Electronic Subregister System (CHESS)
- Derivatives Clearing System (DCS)
China
- China Securities Depository and Clearing Corporation Limited
Hong Kong
- Hong Kong Exchanges and Clearing Limited
Indian
- Clearing Corporation of India (CCIL)
- Central Depository Services (India) Limited
- National Securities Clearing Corporation Ltd.
- National Securities Depository Limited
Indonesia
- PT. Kustodian Sentral Efek Indonesia
- Indonesia Clearing and Guarantee Corporation
Japan
- Japan Securities Depository Center, Incorporated
- Japan Securities Settlement & Custody, Inc.
- Japan Securities Clearing Corporation
Korea
- Korea Securities Depository
- Korea's Financial Telecommunications and Clearings Institute (KFTC)
Malaysia
- Bursa Malaysia Depository Sdn Bhd
- Bursa Malaysia Securities Clearing Sdn Bhd
Maldives
- Maldives Securities Depository
New Zealand
- New Zealand Central Securities Depository
Pakistan
- Central Depository Company of Pakistan Limited
Pakistan National Clearing Company of Pakistan Limited
Philippine
- Philippine Depository & Trust Corp.
Singapore
- The Central Depository (Pte) Limited
Sri Lanka
- Central Depository Systems (Pvt.) Limited
Taiwan
Thailand
- Thailand Securities Depository Co., Ltd.
