What does clearing mean?

Clearing refers to the process of settling financial transactions, typically in the context of securities or derivatives trading. It involves the confirmation, matching, and settlement of trades between buyers and sellers, ensuring that both parties fulfill their obligations. This process is often managed by clearinghouses, which act as intermediaries to reduce counterparty risk and facilitate efficient transaction processing. In a broader context, clearing can also refer to the removal of obstacles or clutter in various situations, such as data clearing in information technology.