Analysis of the clearing mechanism of capital markets of USA, the regulations in the derivative segment, major hiccups in the last 10 years and a comparison of sectoral performance and expected performance in the near future

Keren Khambhata 1, * and Sayantan Das 2

1 School of Business, Auro University, Surat, Gujrat, India.
2 Department of Finance, SIBM Pune, Maharashtra, India.
 
Review
International Journal of Science and Research Archive, 2023, 10(02), 735–744.
Article DOI: 10.30574/ijsra.2023.10.2.0993
Publication history: 
Received on 20 October 2023; revised on 06 December 2023; accepted on 09 December 2023
 
Abstract: 
A crucial component of any financial market is the clearing system. It is the method used to match and settle deals, assuring the protection of all parties engaged in a transaction. The Securities and Exchange Commission (SEC) in the United States regulates the clearing system for the stock market, while the Commodity Futures Trading Commission (CFTC) regulates the clearing system for the commodity market. In response to changes in the market and hazards, the laws governing the derivatives sector have changed throughout time. Derivative markets have been subject to much more regulation since the 2008 financial crisis. This occurred as a result of the perception that derivatives had a significant role in the crisis. In the past ten years, there has been some fluctuation in the stock market's and commodities market's sectoral performance in the United States. The S&P 500 index has increased in value by more than double, signaling generally positive stock market performance. The commodity market, on the other hand, has been more erratic, with some commodities, like gold and oil, seeing huge price changes. In the short future, it is difficult to predict how the stock market and commodities markets will perform. While some analysts predict that the stock market will continue to do well, others think a correction is almost due. The commodities market is predicted to be unstable as well, with prices influenced by a variety of variables such as supply and demand, economic expansion, and geopolitical developments. This research paper will examine the clearing system for the US stock and commodities markets, the rules governing the derivatives market, significant setbacks during the past ten years, and a comparison of recent sector performance and anticipated performance. The ramifications of these discoveries for the future of the financial markets will also be covered in the discussion.
 
Keywords: 
Capital Markets; Cleaning Mechanism; Derivative Markets; USA
 
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