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exchange ensure the traders counter party risk by collecting the caution deposit from the broker to settle the amount not paid by the traders
If the buyer paid the amount and not received stocks in given time slot, stock exchange intervene and it buys stock from current pool and handed it over to buyers
Exchange ensure the traders counter party risk through brokers. For brokers to get registered, they need to pay some caution deposit. while trading its the broker’s responsibility to ensure that the concerned party has enough cash/shares in their account. In case if the counter party fails to make the promise, the exchange will complete the deal by taking the money from brokers caution deposit.
Stock exchanges ensures the traders counter party risk through brokers.Brokers when they register will have to pay some amount as caution deposit.If the counter party is not willing to clear the settlement the exchange will take the money from the caution deposit of the particular broker associated with the faulter and settles the trader.It is the the responsibility of the stock brokers to ensure that the settlement is done properly before buying and selling of stocks by their traders.
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