DEFINITION
Clearing House

"Clearing house": (CH). Funds transfer. A formal or informal association of banks in a geographic area that facilitates the exchange of items drawn on participants. This exists via a central location or central processing mechanism through which financial institutions agree to exchange payment instructions or other financial obligations (for example securities). The institutions settle for items exchanged at a designated time based on the rules and procedures of the clearing House. In some cases, the clearing house may assume significant counterparty, financial or risk management responsibilities for the clearing system.
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