Clearinghouse,
Definition of Clearinghouse:
A clearinghouse is a designated intermediary between a buyer and seller in a financial market. The clearinghouse validates and finalizes the transaction, ensuring that both the buyer and the seller honor their contractual obligations.
Banking: Affiliated agency or a facility operated by banks within a geographical area to act as a central site for collection, exchange, and settlement of checks drawn on each other. Modern clearance houses also clear electronic funds transfers.
Futures: Agency or affiliate of a governing exchange (such as a stock exchange) which, as a counter-party to every transaction on that exchange, is responsible for guaranteeing, reconciling, settling, collecting, and clearing, on all trades.
A bankers establishment where checks and bills from member banks are exchanged, so that only the balances need be paid in cash.
Every financial market has a designated clearinghouse or an internal clearing division to handle this function.
How to use Clearinghouse in a sentence?
- It simply remits the cheque to the drawee bank through the clearing house, and transmits an advice of the receipt of the cheque to the collecting bank.
- A clearinghouse or clearing division is an intermediary between a buyer and a seller in a financial market.
- In acting as the middleman, the clearinghouse provides the security and efficiency that is integral for financial market stability.
- To mitigate default risk in futures trading, clearinghouses impose margin requirements.
Meaning of Clearinghouse & Clearinghouse Definition
