clearing fund

What is clearing fund?

clearing fund definition and meaning on Finance terms:
A fund composed of assets contributed by participants in a central counterparty (CCP) or by providers of guarantee arrangements that may be used to meet the obligations of a defaulting CCP participant. In certain circumstances, it may also be used to settle transactions and cover losses and liquidity pressures resulting from such defaults. A clearing fund serves as insurance against unusual price movements not covered by the margin calculation in the event of a member defaulting. <

 

reference: https://www.ecb.europa.eu/home/glossary/html/index.en.html

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