The clearing house also
matches offsetting orders for members and issues notices to holders of short
positions to make delivery. By presiding over the smooth working of the mechanics
of the exchange, the clearing house guarantees every contract, thus giving the
exchange its credibility.
Clearing House
A separate agency through
which all gold contracts on exchanges are
handled. The clearing house may be owned by banks or by exchange members.
The agency is responsible for matching up the participating firms
on every contract traded. This constant monitoring enables it to advise exchange
members at the end of each day what their net margin requirements are, based on
the respective long and short
positions of their clients.