Chapter 04 · Section 4.1

Guarrantee

To be able to guarantee the fulfilment of a options contract, the clearing house:

a) must be strongly capitalized.
b) relies in part on letters of guarantee supplied by clearing members.
c) relies on a clearing fund, i.e. money specifically set aside for contingencies.
d) a & b
• e) a, b and c
  Yes. The guarantee fund or clearing fund is to be used first if the defaulting members margin deposit is insufficient. Moreover, to become a clearing member, an institution usually must provide a fixed amount of collateral. Continue

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