How Do Clearinghouses Charge?

Clearing firms charge their members a transaction fee every time they make a trade. Transaction fees are usually no more than pennies or fractions of a penny that are added to the trading costs. The trading volume determines how much income the clearing firm makes in transaction fees for that day.

How do clearinghouses work?

A clearing house takes the opposite position of each side of a trade. When two investors agree to the terms of a financial transaction, such as the purchase or sale of a security, a clearing house acts as the middle man on behalf of both parties. ... Each futures exchange has its own clearing house.

How does a clearing house make money?

To earn a clearing fee, a clearing house acts as a third-party to a trade. From the buyer, the clearing house receives cash, and from the seller, it receives securities or futures contracts. ... Investors who make several transactions in a day can generate significant fees.