dido:public:ra:xapend:xapend.a_glossary:c:clearing_house
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dido:public:ra:xapend:xapend.a_glossary:c:clearing_house [2022/04/25 20:44] nick |
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| In order to act efficiently, a **Clearinghouse** takes the opposite position of each trade, which greatly reduces the cost and risk of settling multiple transactions among multiple parties. While their mandate is to reduce risk, the fact that they have to act as both buyer and seller at the inception of a trade means that they are subject to default risk from both parties. To mitigate this, clearinghouses impose margin requirements. | In order to act efficiently, a **Clearinghouse** takes the opposite position of each trade, which greatly reduces the cost and risk of settling multiple transactions among multiple parties. While their mandate is to reduce risk, the fact that they have to act as both buyer and seller at the inception of a trade means that they are subject to default risk from both parties. To mitigate this, clearinghouses impose margin requirements. | ||
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| + | <figure clearingHouse> | ||
| + | {{ :dido:public:ra:xapend:xapend.a_glossary:c:screen_shot_2022-04-25_at_5.55.31_pm.png?500 |}} | ||
| + | <caption>The relationship between a buyer, a seller and a Clearinghouse.</caption | ||
| + | </figure> | ||
dido/public/ra/xapend/xapend.a_glossary/c/clearing_house.1650933855.txt.gz ยท Last modified: 2022/04/25 20:44 by nick
