Clearinghouse

A clearinghouse is a financial institution that facilitates the exchange of payments, securities, or derivatives transactions. Having the responsibility for setting the price, quality, quantity, and maturity of the contract, clearinghouses make sure that the buyer and seller honor their contract obligations, maintained by banks for settling mutual claims and accounts. Clearinghouses acts as an intermediary between two entities that are engaged in a financial transaction, including settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery of the bought/sold instrument, and reporting trading data.