New ways to combat clearing-house risks

Minimising crowded trades will reduce systemic risks building up in clearing houses, suggests Albert Menkveld

“Order, gentlemen, order! ”

The manager often called the attention of the clerks when any disagreement led to heated conversation. It was all part of the daily six-minute clearing procedure, first established in New York in 1853. Clerks from 60 banks tried to confirm payment obligations. Clerks inside a ring shuffled past clerks outside it. Inside clerks reported the total payment their bank owed to the bank of the outside clerk.

In 1858, James Gibbons described in much colour how the New York