In which market does a clearinghouse serve as a third party to all transactions?
A)Futures
B)Forwards
C)Swaps
D)None of the above

Question

Quizplus · Accepted Answer

Clearinghouses are commonly used in the futures market to act as a third party to all transactions. The clearinghouse guarantees the performance of both the buyer and seller, mitigating counterparty risk. It also collects margin from both parties to ensure they have sufficient funds to meet their obligations. Clearinghouses may also facilitate the settlement of transactions and maintain records of positions and margin.

In Which Market Does a Clearinghouse Serve as a Third