jackfrost11770
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LSDefine
Simple English definitions for legal terms
clearinghouse
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A quick definition of clearinghouse:
A clearinghouse is a place where banks exchange checks and settle their daily balances. It's like a big club where banks go to make sure they have enough money to cover all the checks they've received. It's also a place where brokers go to clear their daily transactions on the stock and commodity exchange. Finally, it can be any place where people exchange specialized information.
A more thorough explanation:
A clearinghouse is a place where banks or other payors exchange checks and drafts and settle their daily balances. It can also refer to a stock-and-commodity exchange where brokers' daily transactions are cleared. Additionally, it can be any place for the exchange of specialized information.
- Example 1: A group of banks in a city have formed a clearinghouse to exchange checks and drafts. Each bank sends the checks and drafts they have received to the clearinghouse, which then sorts and settles the balances between the banks.
- Example 2: The New York Stock Exchange is a clearinghouse for brokers to trade stocks and clear their transactions.
- Example 3: A medical research organization has created a clearinghouse for doctors to share information about rare diseases and treatments.
These examples illustrate how a clearinghouse can be used in different contexts to facilitate the exchange and settlement of information or transactions between parties.