Counterparty Clearing

Post date: Oct 21, 2011 5:27:50 AM

True central counterparty clearing (CCC) is done by the OCC (Options Commodity Clearinghouse) in Chicago, IL. The Options Commodity Clearing house is

"a true central clearing counterparty [because it] bears all default risk (by distributing it evenly among its members)."

via Wikipedia: Central Counterparty Clearing

This is a system flowchart of the Trade Lifecycle, also via Wikipedia, dated 2007:

In the United States, true central counter party clearing is the exception. Instead of CCC, there is usually some form of separation between the Clearing Broker and the Depository. This means that there will be multiple clearing brokers that must reconcile shares and money against other clearing brokers. It also means that the clearing brokers bear the risk of default on the leg of the transaction that they are servicing.

Some other firms in the U.S.A. that may still be providers of true CCC are:

• • Electronic Securities Processing (ESP)

  • Firefly

• UNX