# Clearing House

*Markets & Instruments — Finicade finance glossary*

A clearing house steps between buyer and seller and becomes the counterparty to both, so neither has to assess the other's creditworthiness. It manages that concentrated risk with initial margin, daily variation margin and a default fund contributed by members. Post-2008 rules pushed most standardised derivatives into central clearing, which reduced bilateral contagion — and created a small number of institutions whose own failure would be catastrophic.

**Also known as:** central counterparty, CCP, clearinghouse

**Related terms:** [Counterparty Risk](https://finicade.com/glossary/counterparty-risk), [Settlement (T+1)](https://finicade.com/glossary/settlement), [Margin](https://finicade.com/glossary/margin), [Daily Settlement](https://finicade.com/glossary/daily-settlement), [Systemic Risk](https://finicade.com/glossary/systemic-risk)

**Taught in:** Hull Street — Margin, Settlement & Mechanics

Source: https://finicade.com/glossary/clearing-house