=10.= The boards of trade in different cities maintain a clearing house somewhat similar to that used by the banks, to settle the deals of each member of the board each day. The deals consummated during the day's session are reported to the clearing house and the amounts due from and payable to each firm or individual member are computed. If the brokerage firm has purchased ten thousand dollars more than it has sold, a check is given to the board for ten thousand dollars, as there must be some other firm or firms who have sold more than they have purchased to whom this ten thousand dollars is due, and to whom it is paid. Deliveries of stock are made at the time the balance is paid.
=11.= At the close of the day, settlements for grain purchases are made between brokers at an agreed _settlement price_. If brokers have bought and sold to each other in varying amounts, only the difference in the price is adjusted with each other. What are called _ring settlements_ save considerable time, money, and labor. The _ring settlement_ is a settlement between three or more parties without the necessity of margining and may be illustrated in this manner:
_A_ has bought 50,000 bushels of wheat of _B_, and has sold 50,000 bushels to _C_. By inquiry, it is found that _C_ has sold 50,000 bushels to _B_. It is ascertained that the transactions between _A_, _B_, and _C_ offset each other, and instead of each party being obliged to put up margins upon each transaction, a settlement may be effected by paying the difference in price, as the sale from _C_ to _B_ may be at a different price from the sale made by _B_ to _A_, and the sale made by _A_ to _C_, may have been at a still different price. By the adjustment between the different parties of the difference in price, the necessity of margining by _A_, _B_, or _C_ is rendered unnecessary.
_A_ bought 50,000 bushels of wheat of _B_ at $1.23; A sold 50,000 bushels of wheat to _C_ at $1.23½. By making up the ring it was found that _C_ has sold to _B_ 50,000 bushels at $1.22½. In making the settlement it is found that _C_ is indebted to _B_ ½ cent per bushel for the amount sold, as _B_ sold at ½ cent advance; _C_ is also indebted to _A_ ½ cent per bushel as he purchased of _A_ at a ½ cent advance on the price _A_ bought from _B_. The settlement of this deal would be made by _C_ giving his check for the amount due to _B_ and to _A_, and there would be no necessity for any one of the three brokers putting up a margin on the deals. The amount of grain is offset one by the other, and the difference in price has been adjusted by payment of cash.
