A clearing house is a financial institution that facilitates the exchange of payments, securities, or derivatives transactions between parties. It acts as an intermediary, ensuring that trades are settled efficiently and reducing the risk of default. By centralizing the clearing process, it helps maintain market stability and transparency. Clearing houses are essential in various markets, including stock exchanges and futures markets. They manage the clearing and settlement of trades, ensuring that both buyers and sellers fulfill their obligations. This process often involves the use of margin requirements and collateral to mitigate risks associated with trading activities.