MONEY CLEARANCE AND SETTLEMENT 397
the member has a credit he can draw upon his account there
for it. But as with other credits or charges on members’ ac-
counts there, the Stock Clearing Corporation must be in every
case specifically ordered to perform this service for its members.
Accommodation Allowed to Clearing Members.—Against
the possibility of insolvency on the part of a clearing member,
the Stock Clearing Corporation has its “clearing fund,” which
is deposited on demand in various New York banking insti-
tutions and is thus always liquid and entirely at its immediate
disposal. But with the exception of this “clearing fund,” the
Stock Clearing Corporation starts its operations each morning
without a cent of money or a single security certificate in its
members’ accounts or its cages, and each evening ends its day’s
operations in the same position. All money which its members
pay into the Corporation, and all securities which they deliver
to it, are withdrawn from it by them the same day. The same
basic situation of course obtains in all bank clearing houses;
like them, the Stock Clearing Corporation is merely an agent
of its members for the settlement of their contracts with each
other.
Nevertheless, during the day the Stock Clearing Corpora-
tion may in fact extend considerable temporary accommoda-
tion to its members. For a clearing member may receive secur-
ity deliveries faster or more extensively than he makes them,
and in this way run up large debits on his Stock Clearing Cor-
poration account which are not, temporarily at least, offset by
the establishment on it of offsetting credits. Likewise, a clear-
ing member may get the Corporation to pay off a collateral loan
for him, and then rapidly or extensively withdraw the security
collateral from his cage, thus leaving a large unsecured debit
therefor on his account. In consequence, one of the most im-
portant tasks of the Corporation consists in vigilantly watching
such temporary extensions of its credit to its members, and
preventing them from becoming excessive.
The maximum amount of daily accommodation which the
