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Glossary

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Clearing 

Clearing is one of the most common services in the financial market, especially for interbank transactions.

Content

Definition

Clearing is a system of non-cash payments for goods or services between parties that have mutual agreements or obligations.

Clearing can take place between companies or countries, and its main purpose is to reduce the number of payments for services or goods provided under a previously concluded agreement, or to reduce the cost of banking operations.

 

Clearing benefits

  1. High speed of work. Without real deliveries of goods or money, the speed of settlements increases significantly.
  2. Availability of insurance and guarantee funds helps reduce clearing risks.
  3. Simplification of interaction with representatives of the parties to the transaction (counterparties), regardless of their location.
  4. Very low maintenance.
  5. No influence on the calculation of price fluctuations.

Despite its advantages, clearing also has the disadvantage of compulsory audits. As a rule, this is necessary if one of the counterparties made a mistake in the calculations. To avoid this, clearing organizations are used.

Clearing organization - any legal entity licensed to carry out clearing and acting as an intermediary between the two parties to the contract.

IMPORTANT: Please be informed, that our services are available for Professional Clients only. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.