Clearing and Settlement of Derivatives

To fully understand the structure of the markets and the associ-

ated processes involved, let us start by looking at the situation in the

exchange and clearing house environment.

Futures trading

Futures are traded on exchanges either by an electronic dealing sys-

tem or by an open outcry in designated trading areas on an exchange

floor. In some cases futures are traded by both mechanisms, for

instance on the CBOT, but a majority of the major markets are today

solely electronic.

Prices and the volume of contracts traded of the futures available

for trading are distributed by the exchange and major information

systems like Bloomberg ...