Most clearing systems are operated by commercial banks as part of their cash management and funds transfer operations. This research project is an inquiry into the causes of this dominance by banks, and also into the possibility of entry into this field of business by non-bank institutions.

The research will proceed by establishing a formal analytical framework for studying the clearing, and also the potential sources of profit opportunities. Part of the cause of the dominance of banks in the clearing business is their ability to manage the risks associated with this operation.

The principal source of risk is in the netting process which is central to all current bank-run clearing operations. This netting operation exposes banks to counter-party risk for the duration of the netting period. The higher the trading volumes and longer this period, the larger the risks to which members of the clearing organization are exposed.