Multiple choice general knowledge

The primary function of the Clearing Corporation is to:

  1. prevent speculation in futures contracts.

  2. ensure the integrity of the contracts traded.

  3. clear every trade made at the CBOT.

  4. supervise trading on the exchange floor.

  5. both (2) and (3).
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

The Clearing Corporation serves two critical functions: ensuring contract integrity by acting as the central counterparty to all trades (becoming the buyer to every seller and seller to every buyer), and clearing every trade made at the exchange. This interposition removes counterparty risk and guarantees contract performance.

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