Central Counterparty Clearing

Central Counterparty Clearing (CCC) is a process by which financial transactions in equities are cleared by a single (i.e., "central") counterparty.

In the United States, there is a separation between the Clearing Broker and the Depository. This means that there will be multiple clearing brokers that have to reconcile shares and money against other clearing brokers. It also means that the clearing brokers bear the risk of default on the leg of the transaction that they are servicing. Contrast this with the options market with its Options Clearing Corporation, which is a true central clearing counterparty and which bears all default risk (by distributing it evenly among its members).

To better understand Central Counterparty Clearing (CCC), a relatively new process, in the U.S. equity markets, first consider the lifecycle of a trade before Central Counterparty Clearing:

On Settlement Date (which is usually up to 3 days after Trade Date, the date when the actual trade occurred), the Clearing Brokers will deliver/receive the match amount of shares/money to settle the trade with both Investment firms.

Further Overview:

Firms providing Central Counterparty Clearing (may be incomplete):