clearing-house

n.
An office where banks exchange checks and drafts and settle accounts.

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. Clearing houses act as third parties to all futures and options contracts - as a buyer to every clearing member seller and a seller to every clearing member buyer.

Investopedia Says:
Each futures exchange has its own clearing house. All members of an exchange are required to clear their trades through the clearing house at the end of each trading session and to deposit with the clearing house a sum of money (based on clearinghouse margin requirements) sufficient to cover the member's debit balance. For example, if a member broker reports to the clearing house at the end of the day total purchase of 100,000 bushels of May wheat and total sales of 50,000 bushels of May wheat, he would be net long 50,000 bushels of May wheat. Assuming that this is the broker's only position in futures and that the clearing house margin is six cents per bushel, this would mean the broker would be required to have $3,000 on deposit with the clearing house. Because all members are required to clear their trades through the clearing house and must maintain sufficient funds to cover their debit balances, the clearing house is responsible to all members for the fulfillment of the contracts.

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In general: central operation for processing transactions and for collecting, storing, and disseminating information. Clearinghouses are frequently used to receive and process payments or checks. For example, a group of banks might utilize a clearinghouse to receive checks and charge check amounts against the appropriate accounts.

Internet: service bureau utilized by Internet marketers to verify the legitimacy of on-line credit card charges by validating the card number and checking account balances. These clearinghouses may also authorize charges, reconcile and settle accounts, and handle chargebacks.

1. Banking. Association of banks organized to exchange checks, drafts, or other payments types, including electronic transfers. A clearinghouse maintains a daily log of transactions it accepts on behalf of members. At the close of business the clearinghouse arranges the Settlement of obligations and transfer of funds from members who owe money to members who have money due. In its capacity as a central facility, the clearinghouse acts as buyer to all sellers and seller to all buyers. See also Automated Clearinghouse; Clearing Corporation; Clearing House Funds; Netting; Net Settlement.

2. Futures. An agency affiliated with a commodities exchange through which transactions are settled, through delivery of the commodity or purchase of offsetting futures positions.

For more information on clearinghouse, visit Britannica.com.

The method of clearing—matching offsetting items so that only the balances due after the clearing need to be settled—has been used for centuries by many different kinds of organizations, although by far the most common use of clearing in the United States has been in connection with bank checks.

The pattern for this kind of transaction was set in 1773, when the first London clearinghouse was organized to replace the coffeehouse at which weary bank runners regularly gathered to exchange their batches of checks. American cities copied this example, and by the end of the Civil War there were clearinghouses in New York, Boston, Philadelphia, and Chicago. Others followed as the country expanded westward. In 1900 there were eighty-seven clearinghouses in the United States, and the number reached a peak of 198 in 1920. Small towns with more than one bank either used the facilities of the nearest city clearinghouse or devised an informal local clearing place.

In addition to handling check collections, many of the larger clearinghouses assumed other responsibilities for the Banking community until the Federal Reserve period: they conducted examinations of their member banks, published reports of their condition, and aided those in difficulty during crises by issuing loan certificates to be used in settling clearing balances. These functions became less important when one state after another, even before the Civil War, began to regulate the banks they had chartered, and the national government, in the National Banking Act of 1863, created the office of comptroller of the currency to regulate banks under national charter. In 1914 the Federal Reserve System took over some of the regulation of all banks that became members of the system.

The establishment of the Federal Reserve system affected check clearing in a number of ways. The twelve Federal Reserve banks handled intercity clearing within their respective districts, leaving intracity checks to local clearinghouses. The time needed for long-distance clearing also decreased. Checks between New York and San Francisco, for example, which had formerly required eight days' travel, were put on a two-day basis, regardless of delays in the actual physical arrival of the checks.

Developments outside the banking system also affected the work of the clearinghouses. Many stock and Commodity Exchanges cleared the transactions of their members, thus reducing payments made through banks. Greatly increased use of charge accounts and credit cards after World War II reduced the number of transactions by increasing the average size of check payments. Gradual adoption of accounting machinery and computers also altered the nature of clearing.

When American clearinghouses were first organized, their published reports provided important information on the state of the economy, since there were few other available measures of business activity. These figures became less significant after the Federal Reserve banks began in 1918 to collect and publish the monthly totals of "debits to individual accounts." These included all checks drawn, even those exchanged between customers of the same bank and not included in that bank's clearings. The ratio of total clearings to total debits declined steadily. Despite these changes, in the early 2000s the work of the clearinghouses continued to be an essential feature of financial activity.

Bibliography

Garvy, George. Debits and Clearings Statistics and Their Use. Rev. ed. Washington, D.C.: Board of Governors of the Federal Reserve System, 1959.

Spahr, Walter Earl. The Clearing and Collection of Checks. New York: Bankers Publishing, 1926.

—Margaret G. Myers/C. W.

An association, usually formed voluntarily by banks, to exchange checks, drafts, or other forms of indebtedness held by one member and owed to another. 399 N.E. 2d 930, 932. The object of such an association is to effect at one time and place the daily settlement of balances between the banks of a city or region with a minimum of inconvenience and labor.

In a stock or commodities exchange, the term signifies an organization to facilitate the settlement of debits and credits of its members with each other. In essence, it operates on the same principles of centrality and convenience as does the clearinghouse association for banks. For example, if broker A is obligated to deliver 5000 shares of XYZ stock and is entitled to receive 4500 such shares from B, C, and D brokers, he would deliver at the end of the day to the clearinghouse only 500 shares.

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Dansk (Danish)
n. - afregningskontor, clearingkontor

Français (French)
n. - chambre de compensation

Deutsch (German)
n. - (econ.) Clearingstelle, Abrechnungsstelle, Verrechnungskasse

Ελληνική (Greek)
n. - (οικον.) γραφείο συμψηφισμού επιταγών

Italiano (Italian)
stanza di compensazione

Português (Portuguese)
n. - carteira (f) de compensação

Русский (Russian)
расчетная палата

Español (Spanish)
n. - cámara de compensación

Svenska (Swedish)
n. - clearingcentral (för banker), central (för information)

中文（简体）(Chinese (Simplified))
票据交换所

中文（繁體）(Chinese (Traditional))
n. - 票據交換所

한국어 (Korean)
n. - 어음 교환소

日本語 (Japanese)
n. - 手形交換所

עברית (Hebrew)
n. - ‮מסלקה‬

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