Clearinghouse
A clearinghouse is a financial institution that acts as an intermediary between two parties in a transaction. It is responsible for verifying the accuracy of the transaction and ensuring that the funds are transferred from one party to the other. Clearinghouses are used in a variety of financial transactions, including stock and bond trades, foreign exchange transactions, and derivatives trades. They are also used to settle payments between banks and other financial institutions.
History of Clearinghouses
The concept of a clearinghouse dates back to the 17th century, when it was used to settle payments between merchants. In the 19th century, clearinghouses were established in the United States to facilitate the settlement of payments between banks. Today, clearinghouses are used in a variety of financial transactions, including stock and bond trades, foreign exchange transactions, and derivatives trades. Clearinghouses are also used to settle payments between banks and other financial institutions.
Comparison of Clearinghouses
| Clearinghouse | Transaction Type | Fees |
|---|---|---|
| NYSE | Stock and Bond Trades | 0.25% |
| CME | Derivatives Trades | 0.50% |
| ICE | Foreign Exchange Trades | 0.10% |
Summary
A clearinghouse is a financial institution that acts as an intermediary between two parties in a transaction. It is responsible for verifying the accuracy of the transaction and ensuring that the funds are transferred from one party to the other. Clearinghouses are used in a variety of financial transactions, including stock and bond trades, foreign exchange transactions, and derivatives trades. They are also used to settle payments between banks and other financial institutions. For more information about clearinghouses, visit the websites of the NYSE, CME, and ICE.
See Also
- Stock Exchange
- Bond Market
- Derivatives
- Foreign Exchange
- Settlement
- Payment System
- Intermediary
- Brokerage
- Clearing Member
- Clearing Bank
