Clearing cost is a fee that is charged during futures trading. It is also called as clearing fee. This amount is being charged by the clearing house, which is a separate agency or corporation that deals with the trade of futures. This is a variable cost that depend on various factors like:
- Size of transaction
- Type of service provided by agency to investor
- Whether transaction include other fees like brokerage fee, delivery fee etc.
Does clearing cost affect investor anyway?
Usually this cost is doesn’t have any effect. But if the owner is trading more number of futures a day, this cost might add up to have some effect on the owner. This happens because the futures are long term contract, which is believed to have a market domination over time.
Some clearing agencies in India
SEBI (Security and Exchange Board of India) is the regulatory organization who controls the clearing houses in India. All agencies must follow an international code provided by the IOSCO (International Organization of Securities Commissions). 3 most prominent agencies identified by SEBI are:
- NSCCL(National Securities Clearing Corporation Ltd) is the clearing agency for all trades done on the Derivatives segment in NSE (National Stock Exchange, India). This agency is the legal counter-part for all dealings done on NSE’s Derivaties segment and confirms the settlements. This agency is wholly owned subsidiary of National Stock Exchange (NSE).
- ICCL(Indian Clearing Corporation Ltd) is a wholly owned subsidiary of Bombay Stock Exchange (BSE).
- MCX-SXCCL (MCX-SX Clearing Corporation Ltd) is the clearing agency of MCX India
