Introduction to Financial Markets (405) — CBSE Class 10 board question

A Clearing Corporation performs three main functions:

1. It clears and settles all transactions — completing the process of receiving and delivering shares/funds to buyers and sellers.
2. It provides a financial guarantee for all transactions executed on the exchange.
3. It provides risk management functions.

Example: NSCCL is the Clearing Corporation for NSE.

Source: Chapter 8, Section 8.3 – Clearing & Settlement

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• This is a direct 2-mark definition question. Examiners expect all three functions to be listed clearly — missing even one may cost half a mark.
• Mentioning NSCCL as an example adds value but is not compulsory.
• Keep it concise; no need to elaborate on each function.