For settlement of securities transactions in stock exchanges, the Clearing Corporation plays a major role for smooth functioning of capital market." Briefly explain the importance of Clearing Corporation.

Clearing corporation means an entity that is established to undertake the activity of clearing and settlement of trades in securities or other instruments or products that are dealt with or traded on a recognized stock exchange. For settlement of securities transaction in stock exchanges, the Clearing Corporation plays a major role for smooth functioning of capital market by being responsible towards many key functions. Clearing Corporation is responsible: - for clearing and settlement of all trades executed on Stock Exchange and deposit and collateral management and risk management functions; to bring and sustain confidence in clearing and settlement of securities; to promote and maintain, short and consistent settlement cycles; to provide counter-party risk guarantee; and to operate a tight risk containment system. Section 8A(1) of the Securities Contracts (Regulation) Act, 1956 provides that a recognized stock exchange may with the prior approval of the SEBI, transfer the duties and functions of a clearing house to a clearing corporation, being a company incorporated under the Companies Act, 2013, for the purpose of - the periodical settlement of contracts and differences thereunder; the delivery of, and payment for, securities; any other matter incidental to or connected with such transfer.