Board of Trade Clearing Corporation (BOTCC), currently The Clearing Corporation (CCorp), is charged with the duty of assuring futures market stability. Established in 1925 as the first stand-alone United States futures market clearinghouse, its establishment helped in trading activity integrity and smooth execution.
A Brief History:
The BOTCC was first formed by the Chicago Board of Trade (CBOT) and had only one purpose: to serve as its clearing organisation. It later added clearing for other exchanges as well, such as the Chicago Climate Futures Exchange and the US Futures Exchange.
Celeda Operations:
The BOTCC clearing houses stand in between the trades and act as the buyer to each seller and the seller to each buyer. They aid in reporting and settling the trades accordingly. They settle, confirm, and deliver trades and further provide required trading information to keep the market organised.
BOTCC makes complicated transactions like futures contracts possible, which reduces the risk of the counterparty and provides confidence to traders.
Intercontinental Exchange(ICE) Acquisition:
The Intercontinental Exchange (ICE) bought BOTCC in March 2009 and made it a subsidiary to enable ICE Clear Credit and ICE Clear Europe. With this acquisition, the role of clearinghouses in the emerging new financial markets was solidified.
Conclusion:
The creation of the BOTCC to The Clearing Corporation in ICE is to reaffirm its ongoing viability in providing market efficiency and trust. Its clearing mechanisms remain functional to ensure smooth future market operations.
