explain clearing house function in banking system class 12 economics
Answers
Answer:
clearing house system a centralized mechanism for settling indebtedness between financial institutions involved in money transmission and dealers in commodities and financial securities. In the case of UK commercial banking, for example, the London Clearing House collates all of the many thousands of cheques drawn, transfers bank deposits from one bank to another, cross-cancels them, and calculates the net balances owing or receivable for each bank. The COMMERCIAL BANKS' balances at the Bank of England are then debited or credited as appropriate. A similar ‘clearing’ function is performed in the commodities and financial securities market by, for example, the International Commodities Clearing House and the London Financial Futures Exchange and TAURUS. See FINANCIAL SERVICES ACT 1986, FINANCIAL SYSTEM, BANKING SYSTEM, COMMODITY MARKET, STOCK MARKET, FORWARD MARKET.
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Answer:
A clearing house is an intermediary between buyers and sellers of financial instruments it is an agency or separate corporation a future exchange responsible for settling trading account
clearing trades collecting and maintaining margin monies regulating dilivery and reporting trading data