CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

The net futures position of the clearinghouse ______.

A. is net LONG in the amount of open interest
B. is net SHORT in the amount of open interest
C. is neither net LONG nor net SHORT
Correct Answer: C

Since the clearinghouse is buyer to every seller and seller to every buyer, all of its LONG positions are balanced by SHORT positions. As a result, the clearinghouse's net position is zero-neither LONG nor SHORT.

User Contributed Comments 5

User Comment
synner 0 net position
0is4eva Reading 71: "When a position is established, each party deposits a small amount of money (margin) with the clearinghouse. Then, the contract is marked to market, whereby gains are distributed and the losses collected from each party. Fungibility is assured by the fact that the clearinghouse inserts itself in the middle of each contract and, therefore, becomes the counterparty to each party." "Exchanges have th epower to mark contracts to market when they deem it necessary." "By doing so each day, the clearinghouse ensures that losses cannot build up. Of course, this process offers no guarantee that counterparties will not default. ... the counterparty is defaulting to the clearinghouse."
magicchip always 0 net position. Futures = 0 sum game.
To-be-CFA The clearinghouse is long for sellers and short for buyers.
Inaganti6 Clearinghouse is just an intermediary no ? they themselves have no position.
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