In Crypto Derivatives, What Entities Often Perform the Clearing House Function?
In the cryptocurrency derivatives market, the exchanges themselves often perform the clearing house function. Centralized exchanges like Binance, Bybit, and OKX act as the central counterparty for their own futures and perpetual swap products.
They manage margin accounts, conduct MTM, and guarantee settlements. This integrated model is common in the crypto space, unlike traditional finance where the exchange and clearing house are often separate entities.
Glossar
Central Counterparty
Risk Mitigation ⎊ Central Counterparty, or CCP, refers to an entity stepping between the buyer and seller in a derivatives transaction, guaranteeing performance obligations even if one party defaults.
Centralized Exchanges
Exchange ⎊ Centralized exchanges (CEXs) represent a critical infrastructure within cryptocurrency markets, facilitating order matching and settlement for a diverse range of digital assets, including options and derivatives.
Clearing House
Settlement ⎊ A clearing house, within cryptocurrency and derivatives markets, functions as an intermediary between buyers and sellers, mitigating counterparty risk through a process of novation ⎊ replacing original trade agreements with new ones directly with the clearing house.
Conflict of Interest
Scenario ⎊ Conflict of Interest arises when an entity involved in market making, oracle provision, or protocol development possesses private information or a vested financial stake that biases their actions against the broader user base.
Decentralized Exchanges
Access ⎊ These platforms offer permissionless entry to cryptocurrency and tokenized asset markets, democratizing capital deployment into novel financial structures.