A "clearinghouse" operated by the futures exchange handles the ____.
A) offices of the future contract buyers
B) location of the future contract sellers
C) payments between buyers and sellers
D) actual products bought and sold

Question

Quizplus · Accepted Answer

A "clearinghouse" operated by the futures exchange handles the payments between buyers and sellers of the futures contract. It acts as an intermediary, ensuring that both parties meet their obligations and settling any discrepancies between them. The clearinghouse also manages margin requirements, which are financial guarantees that buyers and sellers must provide to back their commitments to the futures contract. However, the clearinghouse doesn't deal with the physical delivery of the underlying asset or the location of the counterparts.

A "Clearinghouse" Operated by the Futures Exchange Handles the ____