The clearing organization is ... The clearing organization: definition, functions and features of activity

Few have a clear idea of what settlement and clearing organizations are. But this does not change the following fact: such financial structures perform objectively important work. Therefore, their activities and characteristics deserve attention.

Key Concepts

If we talk about clearing activities, then it should be noted that it is related primarily to the definition of mutual obligations. In fact, we are talking about the offset of applications for the supply of securities and the calculations that are made for them.

It can also be said that the clearing organization is financial A banking type structure that acts as a competent intermediary between buyers and sellers. That is, she takes on the buying process, speaking from a particular person or company, intent on buying securities and vice versa. Such mediation allows for full control over the fulfillment of obligations of both parties, which significantly increases the degree of security of the transaction.

Clearing services become relevant immediately after the conclusion of a transaction between the two parties, both on the stock market and the over-the-counter market.

As for the transaction transfer process, for which the term "innovation" is used, it can take from several weeks (over-the-counter markets) to several seconds (stock).

Often, a clearing organization is a division of stock exchanges where securities are traded, which enables the latter to exercise full control over various transactions.

Requirements in Russia

Clearing activity in the territory of the Russian Federation is legal, but the organization that provides such services must meet certain standards and fulfill key requirements.

So, the functions of a clearing organization can only be performed by an economic company, which was created in full compliance with Russian law. At the same time, the right to transfer authority to the sole executive, for example, the managing structure, is initially blocked.

Those requirements, which are fixed in the Federal legislation regarding the activity in the field of clearing, also apply to the central counterparty.

At the same time, there are a number of areas where the clearing companies do not have the right to be active:

- insurance, trade and production activities;

- participation in non-state pension and unit investment funds;

- keeping the register of securities owners;

- management of joint-stock investment funds;

- activities associated with a specialized depository of investment funds.

It is worth remembering about the financial statements. It should be provided in a consolidated form by both the clearing settlement organization and the central counterparty. As for the annual report, it should display accounting for 12 months.

The company that provides clearing services can dispose of its property in any way. This means that the purchase of securities for own funds is also permissible.

Possible combination of activities

It is worth knowing that a clearing organization is a structure that, in addition to its core business, can act as a bidding organizer. But such an option is available only if several conditions are fulfilled:

- refusal to participate in the depositary, brokerage and dealer activities in the stock market;

- loss of the right to act in the status of a central counterparty;

- a ban on the management of securities.

If the organization plans to combine the provision of clearing services with activities as a broker, manager or dealer in the stock market, it can not at the same time be a central counterparty.

Also, when a clearing organization carries out an activity other than the main one, it must create one and, if necessary, several structural subdivisions, and separate ones. Afterwards, clearing will be carried out through them.

Objectives

Any organization that carries out activities in the field of clearing, is focused on achieving several key goals. They look like this:

- Reduction of the time required for the calculation;

- reducing the level of costs associated with the settlement services of RBC participants;

- maximum reduction of risks accompanying settlements in the framework of clearing activities.

Obviously, such organizations make transactions easier and more reliable, which is what attracts a lot of clients to them.

In doing so, it is worthwhile to understand the following: to achieve the above objectives, a license of the Central Bank is required, which entitles to servicing any settlement operations at a particular RBC. In most cases, such companies are registered as LLC, although other legal forms are possible.

It makes sense to mention that a clearing organization is a structure that can work both with one market of securities, and with several. And the format of activity sometimes happens not only national, but also international.

Key Functions

After the bidding organizer enters into a contract with the clearing center, certain activity is expected from the organization. The essence of the latter can be reduced to a set of actual functions for the sake of which clearing exists:

- checking the availability of the initial margin on the bidder's account;

- receipt of applications in the trading system and their subsequent registration;

- Acceptance of applications-offers received from clients;

- registration of the transaction that was concluded;

- reconciliation after acceptance of applications for the subject of a counter application;

- ensuring full and accurate fulfillment of obligations of both parties involved in the transaction;

- determination of the size of the variation margin and its transfer;

- formation of guarantee (special) funds;

- ensuring the final settlement between those contractors that were specified in the contract.

In performing these functions, the clearing organization can represent the interests of the two parties in the presence of their prior consent. Moreover, it is already obvious that, without conducting reconciliation of each concluded transaction, the level of disruption of the latter will significantly increase. As a result, large investors will face absolutely unnecessary difficulties. For this reason, those functions that are performed by clearing organizations in the securities market are relevant and even necessary.

How is the capital of the organization formed?

The company that chose the sphere of clearing, of course, should make a profit. And a similar commercial structure generates its capital with the help of the following sources of income:

- registration and support of transactions;

- circulation of funds held by the organization itself;

- sale of information;

- profit from the sale of technology-calculations used by the company and software, including.

It will be fair to note that it is the clearing organizations that occupy one of the central places in the trading of derivative securities. It's about stock options and futures contracts. It is worthwhile to clarify and the moment that in different markets the system of reconciliation will have noticeable differences. This fact is explained by the different volumes of transactions, the cost of operations and a specific market structure.

Types of netting

The activities of clearing organizations include conducting transactions, during which offsetting is used, and two types: multilateral and bilateral.

In the first case, both parties calculate their obligations or requirements within the established period. To determine the position (balance), the difference between the participant's obligation and its demand is recorded. This type of transaction is the most common. In this case, if the balance is not zero, then the position is considered open and closed in the opposite situation.

At the heart of bilateral balancing is the pairwise calculation of mutual claims when using securities or cash. Since within one market it is extremely rare to find mutual offset for shares and currency at the same time, this form is used infrequently.

The situation in Russia

If you pay attention to the exchanges operating in the CIS, you will notice that the overwhelming majority of them independently perform the functions that are typical for clearing organizations. In the West, the situation is diametrically opposite.

It is worth noting that in Russia resort to the services of third-party credit institutions, but only for cash payments based on clearing results and in the amount of net positions. The exchanges could do this part of the work independently, but they do not have such an opportunity because of the limitation of the spheres of activity of non-credit institutions by Russian legislation.

As a result, on the territory of the Russian Federation for full-fledged clearing activities, exchanges require the services of only controlled or affiliated organizations of non-commercial organizations.

Nevertheless, the clearing organization is a form of activity available in Russia, which is considered legitimate in the presence of a license. The last issue is the Central Bank.

Results

On the basis of the above information, it is possible to draw an obvious conclusion: the activity in the field of clearing is relevant and will remain so until the securities markets, as well as foreign exchange deals, are concluded.