please give real example of clearing house facilities of bank
don't scam or fraud
Answers
Explanation:
Example of a Clearing House
Anyone who engages in any kind of financial transaction wants to be protected in regard to the transaction. The buyer wants to be assured of receiving the goods or services they purchased, and the seller wants to be assured of receiving payment. The clearing house stands in the middle and takes both sides to make sure that both parties are satisfied.
Consider an investor who wishes to sell 500 shares of his stock in Emirates Airlines to another investor. It is the clearing house’s job to make sure that the investor gets paid the proper amount for his 500 shares and that the buyer indeed receives the full amount of shares that he paid for. With a clearing house, both parties can rest assured that a successful transaction will take place.
The diagram above shows the simplified flow of a transaction involving two parties, the seller and the buyer, and in between them, the clearing house firm. The clearing house is not only involved in regular transactions of tradable goods but also of those that involve futures contracts (contracts entered into by two parties wherein the buyer is obliged to buy an asset and the seller to sell an asset for an agreed-upon price on an agreed future date). Because futures contracts take time to be fulfilled, it is beneficial to have a third party (the clearing firm) to ensure that the contract is not broken.
Looking again at the diagram, the seller gives the goods to the clearing house, which then gives them to the futures buyer. In turn, the futures buyer hands the payment to the clearing house who will then give it to the seller. In such an arrangement, both parties are protected and assured that they will both receive what is due to them.
Functions of a Clearing House
As mentioned, a clearing house is basically the mediator between two transacting parties. However, there is also more to what clearing houses do. Let’s take a look at some of their functions in more detail.
The clearing house guarantees that the transactions will occur smoothly and that both parties will receive what is due to them. This is done by checking the financial capabilities of both parties to enter into a legal transaction, regardless of whether they are an individual or an organization.
The clearing firm makes sure that the parties involved respect the system and follow the proper procedures for a successful transaction. The facilitation of smooth transactions leads to a more liquid market.
It is the clearing house firm that provides a level playing field for both parties, where they can agree on the terms of their negotiation. This includes having the responsibility for setting the price, quality, quantity, and maturity of the contract.
Answer:
A clearing house is an intermediary between buyers and sellers of financial instruments. It is an agency or separate corporation of a futures exchange responsible for settling trading accounts, clearing trades, collecting and maintaining margin monies, regulating delivery, and reporting trading data