What is a clearing house? - MoneyWeek Investment Tutorials

Clearing houses play in important role in the financial markets. But what exactly are they and what do they do? Tim Bennett explains.

[@TheJoygazmic]

Thank you, really helped understand what happened with the exchanges stopping buys of gamestop today.

[@zolanhlangulela947]

I came here to learn about what happened at Robinhood too..

[@allenberman8742]

Same 😂

[@jonusjonus9271]

so basically this system will end in the next decade because its so slow and inefficient. BTC and blockchain technology will be the winner in the whole gamestop debacle.

[@kristof476]

@@jonusjonus9271 Wrong. Bitcoin uses a way slower verification method/guarantee.

[@StpMakinMeChangMyNam]

@@jonusjonus9271 Update from the future, the major clearing houses and service companies are looking into adopting blockchain technology and continuing their oligopolistic hold on clearing services in finance. They'll likely be successful too because the industry is so heavily regulated and benefits so much from economies of scale that even at the snail's pace they are innovating at, they are not likely to be outcompeted.

[@karltorento3358]

My professor sucks at explaining this. Thank you internet man!

[@felixf4378]

Whos is here trying to understand why the brokers halted buying today?

[@AutoroTink]

Truth! No emotion...just a lesson! Wonderful!

[@jonusjonus9271]

@@AutoroTink i'm on the fence here. I mean this all does make sense why they would halt trading, but man is it suspicious. One thing is for sure, waiting 3 days to transactions to clear is wayyy to long in this day and age. We need to get rid of this.

[@tahmeedomar6663]

same with me.... and also to spread the message to HOLD THE LINE :D

[@w1ntersea]

@@jonusjonus9271 You literally just got explained why they halted trading and you're still talking about it being suspicious? You need to watch the lesson again and take notes.

[@christopherjohnson6970]

@@tahmeedomar6663 what do you mean? You want us to hold.GME and.not sell?

[@pacman0825]

Excellent video, i'm adding a bunch of stock to my current holdings for the long run, do you think these stocks are long term worthy, i've set aside $250k to begin and i'd love to avoid as many mistakes as i can

[@stellaalien2105]

if your trying to avoid mistakes then do yourself a favour and try to get a professional broker

[@sephir0th776]

have you used one before and what result were you able to achieve? i'm still in touch with a good broker and its panning out great so far, just this year alone i've made atleast $350k

[@stellaalien2105]

Mrs Juan Stacy is my personal professional broker, i came in contact with her since 2017 in usa and since then we have been working together

[@stellaalien2105]

you can reach out to her on telegram....

[@stellaalien2105]

@investwithfxstacy1 is her user name....

[@derrickcheong8060]

Big thank you for not putting ads and interrupting our train of thoughts with them! I have youtubed almost 20 finance questions in my own homework, and you have videos that carried every single one of them. It just became an instinct to use you for every question i have. Thank you Sir, really :')

[@sayma89]

Excellent excellent excellent. I was searching long on the connection between clearing houses and margin. This is just it. Clear and concise.

[@bigfriki]

This channel is a true lifesaver.

[@MilitaryBot]

its so easy to understand. Watching your videos from last 3 months enjoyed a lot

[@damaster720]

This guy explains things well. Thanks, Tim.

[@goodstang]

Tim - this is excellent. Keep up the good work!

[@evilzzzability]

This is such a brilliant explanation of how our capital markets work

[@pallavipant7306]

Thank you for the video. very informational and explained the subject very nicely to understand.

[@OML5000]

These are great. Thank you for doing these videos - keep them coming!

[@GiteshBajaj]

thanks.... Explained very clearly.... Also cleared misconceptions Excellent

[@ramprasad1232]

thank you so much to make us understand about clearing house.

[@maxhogg4839]

Fantastic video ! very well explained, thank you very much I now understand what a clearing house is and what it does.

[@SuperSidney1989]

thank you for sharing your financial knowledge :)

[@akshay1981]

Thank You Money Week....you really make life easy...keep going

[@ROCKSTAGT]

Great video sir. I have a question; What is the role of CH in FX trades?

[@jackperry6269]

Are there any videos on risk quantification and risk parameters?

[@onfire4000]

Amazing teacher

[@binasrinivasan4490]

Fantastic explanation.. thanks for "clearing" that up

[@geewhiz747]

I see what you did there

[@suleimanthelondoner]

Thinking of getting a subscription to Moneyweek now. Thanks.

[@abhishekramkumar8875]

Hey Tim what is the difference between a broker and a custodian bank ?

[@541099]

I'm slightly confused. Clearing Houses becomes both buyer and seller while awaiting the settlement phase, but how does the CH take on these legal rights without having to wait for its own settlement phase?

[@IefNaij]

Came here to understand why Robinhood reduced trade, very nice explanation!

[@rhythmandacoustics]

They were forced by their brokers, e.g. Wolverine Securities, Citadel Securities, and so on to pay up.

[@PietroSperonidiFenizio]

So, is this what happened with GME? The Clearing House started asking for a higher margin?

[@derektaylor3956]

How do I find you margin video? Could you maybe make a video explaining the recent shakeup created by Einar Aas?

[@navssall]

Fantastic!

[@FirstClass102]

Is there a video on explaining the margin requirements?

[@jws1802]

Thank you.

[@darkrayc]

I had a question till 10:53 - "Can clearing houses refuse to clear a trade? What are the alternatives they take to refusing the trade?" What I got out of it was: They try not to by raising the margin higher up. So if they have to refuse the clearing, do they have to pay back to their members an SLA fee? Or does it depend on the legal bindings made between the clearing houses and the members?

[@yvettewalker7224]

I have an elementary question. Exactly how is a check cleared? Example: a check is handed to a person/business, that person/business cashes the check at their financial institution, is handed cash & days later the check bounces. What journey did that check take from the time it was introduced to the bank to the time it bounced?

[@chrisragkavas6149]

Excellent and succinct session.

[@asmitashah4639]

What if client defaults on a derivative contract and the clearing member has already paid the mtm call to ccp, would ccp pay back the money to clearing member? Asking cause you mention that guarantees exist to client B by ccp, so does this mean that ccp uses clearing member to honour its guarantees?

[@fahimeousseny8514]

Great video, well explained thanks !

[@strawberryfeeder]

Hi Tim, your video is great! but I'm a bit confused at the end. since the margin is essentially a secure that's being put upfront to ensure both parties perform accordingly to the contract, both parties should be prepared to pay rather than default, thus rising the margin by 10% shouldn't be an obstacle to their transaction since these money are expected to be paid in 2-3 days, is that right?

[@VirjilioPachecoreyes]

KLakkm vWkklQC

[@robhingston]

You made it so clear, No pun intended

[@lukasmajercak4938]

thank you!

[@samuelspencer5047]

I am here because I want to understand what a clearing house is and because I like this channel

[@jop0693]

wow! excelent video!! thank you very much!!

[@jennyli7749]

Does that mean a bank/institution is not a clearing house it’s less safe to trade with them? For eg I deposited a large amount into an isa of a not so well known bank and it took 4 days for money to be deposited....during that time I was sweating bullets because I had no idea where the money was. In the end all was well and deposit went through but their explanation of why it took so long was that it was not a clearing house/bank

[@fernandapernaash1521]

Very good! Thank you for that!

[@KennethBenedict14]

O

[@mineshize]

thx sir

[@nataliah4478]

thanks amazing presentation

[@thegoonist]

dude u r amazing cheers

[@fukd12mpt]

Great video guys! Few retail investors are familiar with the inner-workings of the buying/selling process. A shame the comments are hijacked by marketeers though lol :/

[@templargin]

If the clearing house refunds the money fully, how does it make profit?

[@yashdave91]

Adil T good question. Not everyone defaults. But everyone pays some free to clearing house for every trade.(like insurance companies, not everyone dies but everyone pays premium) And there e margins maintained by clearing House. So technically clearing house takes guarantee for every trade but never looses money 💰

[@ketanmalik406]

Thanks

[@malateshnadiger4355]

Very nice presentation ....

[@DaDemolisher]

best vid to clarify clearing houses cheers

[@michelUSAvideos]

These videos are too good to be true

[@peschebichsu]

Very well explained!

[@XForbide]

In what situation would the seller not be able to deliver the shares or the buyer not be able to deliver the cash, that would necessitate the DTC? Thanks

[@rhythmandacoustics]

If the are heavily leveraged, in this case you might be thinking of the hedge funds that tried to short but couldn't pay the borrowed stock. This is called liquidity or the lack of liquidity in the short seller's case.

[@Alice-gl6um]

omg than you sir1!!!!!! oh gosh it helped me a lot, sir

[@johnny6ryefield]

I have yet to found any vid on youtube that explains financials better than you series mate

[@StuffOffYouStuff]

Haha I've been watching Tim's vids a while and now. I typed in clearing house and his was the first top up. WOW THERE'S LOADS OF VIEWS!! He will be very happy with this. Check his other vids out he's good

[@bilalhassansayed8178]

Thank you Sir.

[@silverhawk923]

What happens when the clearing house can’t cover the sale price?

[@olliemoore11]

love your vids.

[@drvladanmilosevic9028]

Thank you, great explanation, but I have a hard time following the accent, thus don't understand some points since I am not English mother tongue. I would appreciate the subtitles if possible:). Thank you

[@DMBtomp]

lol that's the clearest english accent by an english person you'll ever hear. he's RP to the core

[@PietroSperonidiFenizio]

@@DMBtomp yes, but if you check the automatic subtitles there are times where the AI was unable to understand either. While there are people with a much worse accent, very american accent, but that the subtitle is better able to understand.

[@BruteSia]

Omg the caption is soooo funny!!! hahahahah!!! Btw nice explanation 10/10 !!!

[@myareed5275]

CoconutSquid 1

[@SC-do8mo]

Clearance houses have a real risk of being bag holders when a stock moons, is what I understood from this.

[@delreenzoremsiami6154]

Can you please do a video on the how futures market serve as the price discovery market?

[@millenialmusings8451]

Old KZbin videos were so much better! No flashy thumbnails, no clickbait titles, no sponsor plugs, and no pushy "like and subscribe". Simple and straight to the point.

[@bhavprajapati]

Amazing explanation

[@marydesireeatup7572]

thank youuuu!!

[@atulnemlekar9539]

Thanks a lot for such an insightful video 👍

[@Iamfatemas]

WOOW THANKS

[@NMLP92]

majorly relevant today

[@conormcgregor.7333]

John D. Rockefeller could have only dreamed of such a scam. We need deserialized clearing and settlement, AKA blockchain clearing and settlement.

[@Ease_29]

I came here after 11 years after uploading.

[@Perfectsound88]

EXCELLLL-ENT

[@eddiemontgomery7088]

Can one clear student loans?

[@alisonlazarus4010]

Add Scott_hack1 on instagram he's the best so far..

[@alisonlazarus4010]

Add Scott_hack1 on instagram he's the best so far..

[@alisonlazarus4010]

Add Scott_hack1 on instagram he's the best so far..

[@alexsemchenkov5740]

Great explanation but unfortunately the sound quality is quite poor

[@ap-lt2oj]

question is..why is this still such a long process in 2021

[@andyjohnson9714]

its a question of trust. and it derives from prehistoric times. clearing houses, central banks etc are "trust" providers. you might not trust the seller, but you trust the bank which will handle your transaction.

[@egante]

Blockchain will move it to real time settlements Just needs more proving out in the public domain

[@vinodep7209]

We like the stonk

[@rockysarker]

Sup, have you seen this method called the Intellitus Cash System? (look for it on google). My dad says it makes people plenty of profits.

[@marc_1285]

So basically Robinhood did not have the cash to provide the margin required by the Clearing House right? Why did the CEO say that they did not have a liquidity issue then? That dude was lying in my opinion (even if the Clearing House increased their margin requirements).

[@sha70wequities]

❤

[@avinashgupta5173]

Indian are great in business , money& stock market

[@gauravshukla4563]

explains in lot complicated way

[@exby]

hold GME

[@charlesagnew3801]

Holding AMC

[@omprangyabharatisahoo5137]

Can any one say me what is clearing house. .???

[@omprangyabharatisahoo5137]

Plz answer me

[@omprangyabharatisahoo5137]

It's my exam question

[@raytrack3552]

So they obviously don't uphold their obligations since there are millions of synthetic shares of AMC, which has created millions upon millions of Failure-To-Delivers (FTDs)

[@christopherjohnson6970]

Aged well

[@clycaon9009]

So whats with all the Clearing Houses that can use debts owed to the Banks by others against their own debts to clear out their Debt?

[@clycaon9009]

Good thing I'm Clearing their houses and dropping their shit off into a Volcano ;)

[@clycaon9009]

Had to make another Offering to keep Yellowstone from going off

[@clycaon9009]

Putting Pyramids and Tombs where the houses that were thrown into a Volcano were, sometimes they're there, sometimes they arent.

[@clycaon9009]

Be careful of the Stories spread across the Walls, you'll go into the story, live it, and come out with a new purpose. The whole place should be lit up with light to easily read, but you may just move to another period and find yourself back at the end of the story.

[@clycaon9009]

The Clearing Houses are assholes for saying they gave my family this house btw, We helped build it.

[@busimo]

System is inefficient, not entirely robinhood's fault as we are aware of more information.

[@jonusjonus9271]

this system will end in the next decade because its so slow and inefficient. BTC and blockchain technology will end up being the real winner in the whole gamestop debacle.

[@busimo]

@@jonusjonus9271 yeah, but I think the stock market will catch up in 15 years if not 10.

[@ericmass11]

where's the risk if you can quickly verify the buyer has the money and the seller has the sell... this model seems outdated for 2021

[@andrew7693]

“That’s why you pay your broker 9.99/trade” omg, could you imagine. That’s insane.

[@rhythmandacoustics]

Lol Robinhood is scamming so much people. There is no such thing as a free lunch. If you are not paying for the product you are the product. Robin hood takes huge cut on the spread of your trade.

[@andrew7693]

@@rhythmandacoustics I dont use Robinhood. But still, crazy.

[@tiffanypalla2522]

Low risk penny stocks are the way to go now wellsbee.com offers stocks picks and details on how they work for beginners and experts alike.

[@Toxic-th4si]

To the moon 🚀🚀🚀🚀

[@KingsDaughter.]

With monetary going digital there will be no need for ccp anymore

[@ytchannel8653]

ICT

[@chadfoster2858]

So the Clearinghouse guarantees the transaction for a fee cool How do you own a Clearinghouse because I would love to own a Clearinghouse It's a completely unnecessary part of a digital transaction and still makes a percentage of each transaction, not only that but it has for a 3day window both parties money's worth of transaction . Which boosts it's (companies)asset or trade rating for 3 days. You can't lose ever owning one of these!!!! What a scam owning one of these should be illegal The person's or groups that own these own damn near everything folks this isn't right See after they take your money they reinvest their money back into taking your money You are paying them to take your 💰

[@sundingouesh7955]

Financing stops moving, national infrastructure can slow down or stop. Ask Google about expanding into a different direction. Take KZbin out of the equation? Keep separate?

[@mohdnasir5140]

Page 208 clean-shaven = adj (of men) having the facial hair shaved off.

[@Brigadorski]

Is blockchain technology the answer to removing all of these middlemen?

[@Ellipses13]

Please invest in a proper microphone. The camera mic is insufficient and consequently the audio is poor.

[@owenzaynesdad7920]

love your video. just a bit dry... need some animation or jokes.