The Futures Industry Association (FIA) recently published a white paper that the organization noted examines the role of clearing firms in futures markets as a resource.
The FIA said the work explores how clearing firms could help public sector stakeholders learn more about how intermediaries support safe and efficient capital markets.
Futures markets have various types of intermediaries that offer customers access to the markets and a range of services related to their trading activity. Within the futures markets, the clearing company is an essential type of intermediary.
According to the FIA’s analysis, clearing firms provide clients with a central point of global access to futures exchanges and clearinghouses; maintain a myriad of checks and controls aimed at protecting both markets and customers; they are responsible for collecting margin from clients and guaranteeing clients’ obligations to the markets; and provide significant financial resources to the default funds maintained by the clearinghouses.
The white paper argues that in periods of economic stress and market turbulence, futures markets are key because of their resilience. During the 2008 financial crisis, futures markets operated amid stress in the financial system.
The analysis determined that resilience emphasizes the importance of futures markets to the stability of the entire financial system.