A financial institution that acts as an intermediary between a buyer and a seller in a securities transaction, acting as a buyer for every seller and as seller for every buyer – ensuring that both sides honor their obligations. By guaranteeing trades, clearinghouses reduce the risk that one party might fail to deliver the cash or securities it owes the other party. Clearinghouses also handle such related tasks as collecting margin payments and confirming that funds and securities actually change hands. Registered clearinghouses, known formally as clearing agencies, are regulated by the U.S. Securities and Exchange Commission.