Clearing House

From Reuters Financial Glossary

A clearing house is the administrative centre of a market through which all transactions are cleared. In addition to administering trades, the clearing house guarantees the performance of contracts. It becomes the counter party to both the buyer and the seller of a contract when a trade has been matched, thereby greatly reducing counter party risk. Other functions include making sure that underlying financial instruments or commodities are actually delivered to fulfil futures contracts, and maintaining the margin accounts.

See also: Margin