404 THE WORK OF THE STOCK EXCHANGE 
become infrequent. Yet this unfortunate contingency must 
of course be provided for by the settlement system. 
If a member becomes insolvent before turning in his “night 
clearance sheet” at the Night Branch, and thus involving his 
contracts in the process of security clearance, the Stock Clear- 
ing Corporation is not involved in his failure. Stock Exchange 
members proceed to “buy in” securities which the insolvent 
has sold them, and “sell out” securities which he has bought 
from them. If money losses result from this process, they 
constitute claims by these members against the assets of the 
insolvent. On the other hand, should profits result, these would 
he paid over to the insolvent. In this way, all contracts entered 
into with fellow Exchange members by the insolvent would be 
settled “‘ex-Clearing House” and without involving the re- 
sources either of the Stock Clearing Corporation, or its clearing 
members as such. 
But if the member’s insolvency is announced after his “night 
clearing sheet” has entered into the security clearance, all secur- 
ities deliverable to or deliverable by the clearing member in 
accordance with security balance orders of the Stock Clearing 
Corporation are immediately sold out or bought in on the floor 
of the Stock Exchange by the parties having them to deliver 
:o0 the insolvent or receive from the insolvent. 
If a profit results front the selling out or the buying in of 
securities deliverable to or deliverable by the insolvent clearing 
member under a security balance order, the clearing member 
realizing such profit at once sends a statement of the transaction 
to the Stock Clearing Corporation and pays over the profit to 
it for the account of the insolvent member. 
If a loss results from the selling out or the buying in of 
securities deliverable to or deliverable by the insolvent clearing 
member under a security balance order, the clearing member 
sustaining the loss at once sends a statement of the transaction 
to the Stock Clearing Corporation which pays him the amount