Question

LSE, a London based stock exchange, makes more money from its clearing operations than from trading securities. Critically evaluate how the clearing works and what role do the cash flows connected to various currency derivatives play in it.

Answer 1

Answer) Clearing offers clearing services for derivative markets. This offering includes clearing of both exchange traded and also repo clearing service. The strategy and tactics of the clearing operations begins with the product ranges as all derivatives available from the market are cleared. Further the operations of clearing are reliable and efficient. The clearing possesses sophisticated risk management functionalities.

Generally clearing operations are governed by chaiman, independent board members, board members. The management functions are seen by CEO, Chief Risk Officer, Chief Technology officer, officer of product development, business development.