These controls are incorporated into exchange methods for clearing contacts. The incidence and operations of each are described. Direct-clearing systems feature bilateral contracts with terms specified by the counterparties to the contract.
Exchanges relying on direct clearing system chiefly serve as mediators in trade disputes.
Ringing is shown to facilitate contract offset by increasing the number of potential counterparties. Ringing settlements reduce counterparty credit risk by reducing the accumulation of dependencies as contracts are offset. Ringing settlements also lower the cost of maintaining open contract positions, chiefly by lowering the amount of required margin deposits. Exchanges employing ringing methods generally adopted a clearinghouse to handle payments. Complete clearing interposes the clearinghouse as counterparty to every contract.