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Clearing House

Reviewed by Apoorva | Updated on Sep 30, 2020

Catalogue

Introduction

An inflection point can be considered as a turning point after which a positive or a negative result is expected to occur. Inflection points are much bigger than the little progress that happens on a day-to-day basis.

According to mathematical charting models, an inflection point is where the direction of a curve changes in response to an event. The shift in the curve must be noticeable or decisive and attributed to a particular cause. This is applicable to economic, business, and financial information, such as shifts in the gross domestic product (GDP) or changes in security prices.

Understanding Clearing House

The major responsibility of a clearinghouse is to ensure that both the buyer and the seller honour the contract obligations. Other responsibilities include settling trading accounts, clearing trades, collecting and maintaining margin monies, and reporting trading data.

Clearinghouses take the opposite position of each side of a trade which greatly reduces the cost and risk of settling multiple transactions among multiple parties. As they play both the roles of a buyer and a seller, they are subject to major risk from both parties. Clearinghouses impose margin (initial and maintenance) requirements to mitigate this risk.

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