Clearing House Role In Derivatives

This problem practices understanding the role of clearing houses in derivatives markets, especially how they sit between buyers and sellers to support settlement and reduce counterparty risk. Candidates need to know the basic function of a central intermediary, the difference between market risk and credit risk, and why post crisis regulation pushed more derivatives toward formal clearing. Interviewers ask this because sales and trading candidates are expected to understand how trading infrastructure affects risk, liquidity, and the safety of the financial system.