# Market Contract > Market Contract means a contract in compliance with [governing regulations], for clearing and settlement of transactions in securities or futures **Term:** Market Contract **Last updated:** 2026-07-29 ## Definition ## What Market Contract Means in a Contract A market contract, in a contractual sense, refers to a transaction that has been executed or recorded in a way that satisfies the rules of a recognized clearing house or exchange for securities or futures. Rather than describing an everyday sale or service agreement, the term singles out contracts that are subject to the settlement infrastructure and default rules of a regulated market. This classification matters because it determines whether special legal treatment, particularly around insolvency and default, applies to the transaction. When parties or clearing systems refer to a market contract, they are usually pointing to the fact that the transaction has passed through a recognized clearing mechanism and is therefore governed by that system's rulebook as well as by the law governing the contract. This dual layer of governance is what distinguishes a market contract from an ordinary commercial contract negotiated privately between two parties. ## How Market Contract Is Defined or Measured Whether a contract qualifies as a market contract typically depends on criteria set out in the regulations governing recognized clearing houses and exchanges. These criteria generally focus on whether the transaction relates to securities or futures, whether it is cleared through a recognized clearing house, and whether it complies with the operational rules of that clearing system at the time of execution. The measurement is not about the commercial substance of the deal, such as price or quantity, but about procedural compliance. A contract either meets the definitional requirements to be treated as a market contract or it does not. There is no partial qualification. This binary nature is important because the legal protections attached to market contracts, such as protection from certain insolvency proceedings, only apply once the contract falls squarely within the definition. - The transaction must involve securities or futures rather than other asset classes. - It must be cleared or settled through a recognized clearing house. - It must comply with the applicable rulebook at the relevant time. ## Where Market Contract Appears in Agreements The term market contract most often appears in clearing membership agreements, exchange rulebooks, and the standard terms that link individual trades to a central counterparty. It is less common in general commercial contracts and instead surfaces in the specialized documentation used within the