Clearing: peculiarities and importance in trading activities
One of the basic concepts when working on the exchange is clearing. First of all, it is important for traders who operate on the futures market. Therefore, it is necessary to understand what clearing is and the peculiarities of the process.
The procedure is the verification of information on all concluded deals, their registration, calculation of financial results, as well as the transaction between the parties of the contract. In simple words, clearing is the mutual settlement of transactions. This procedure is performed by independent companies, which must meet a number of requirements, have a certain amount of reserve fund and total capital. Permission for them is granted for an indefinite period, but if the rules are violated, the Central Bank has the right to revoke the license.
The clearing center assumes the role of a guarantor in the implementation of the transaction. In the event that one party of the contract does not have enough funds to fulfill all obligations, then the organization compensates this amount from its reserves.
On the Moscow Exchange, clearing is performed by JSC National Clearing Center, which is a non-banking credit institution. On the trading floor of St. Petersburg these duties are undertaken by JSC “Clearing Center MFB”.
The very procedure at stock exchanges is carried out at specific periods, which are called clearing sessions. At this time information on concluded transactions is sent to the center, where they are registered. Then there is a distribution of funds on all transactions, including commissions.
For the trader clearing serves as a financial identifier of how much he earned during the day. If successful trades have been made, a certain amount of money will come into the account, if not – the funds will be deducted.
Clearing has several varieties, depending on one or another characteristic. For example, according to the number of participants, the procedure is divided into simple, when funds are deposited on one transaction. Also, clearing can be multilateral, when the transfer of money is carried out comprehensively between the participants of various transactions. In the centralized form, the clearing center assumes the obligations under the concluded contracts.
In addition, the procedure differs by the type of parties. If settlements are carried out between companies, it is commodity clearing, between banks – interbank clearing. Accordingly, if transactions are carried out between trading floors – exchange variant, and currency clearing refers to trade turnover between several countries.
At the Moscow Exchange, the procedure is also divided according to the time of the session – daytime and evening. The first clearing session involves the calculation of margin as an accumulated income, but there is no transfer of money. And in the evening the daytime and evening clearing figures are summed up and funds are distributed among the participants.
