Each futures exchange has a clearing association which operates in conjunction with the exchange in a manner similar to a bank clearing house.
Membership in the clearing association is composed exclusively of well-capitalized members of the exchange and corporations or partnerships one of whose officials must be an exchange member Exchange members who do not join the clearing association must clear their trades through a member of the association.
Every clearing-house member must put up fixed original margins and maintain them with the clearing house in the event of adverse price fluctuations. In such instances, the clearing house may call for additional margins throughout the day without waiting for routine end-of-day settlement.
It is worth noting here that parties to a trade who disagree about the information they exchanged in the pit (such as the price, number of contracts or month of the trade) must settle their differences and clear the trade before they are allowed to return to the floor the next morning. Disputes rarely arise, but if they do, exchanges have steps to follow in helping to resolve them.
