What does a clearing agency primarily do in transactions?

The primary function of a clearing agency is to facilitate the settlement of transactions and ensure the delivery of payment. This role is crucial in the financial markets as it acts as an intermediary between buyers and sellers. When a trade occurs, the clearing agency confirms the details of the transaction, matches the buy and sell orders, and ensures that the appropriate securities and cash are exchanged.

By settling transactions, the clearing agency reduces the risk of default by either party and enhances the efficiency of the trading process. It plays a vital role in maintaining market integrity and stability by managing the complexities involved in trade settlement, including the transfer of securities and funds.

The other options represent functions that are not typically associated with clearing agencies. For example, managing a stock exchange involves overseeing the trading platform itself, while underwriting new securities pertains to the issuance process, not the settlement of trades. Offering investment advice falls under the domain of financial advisors or brokers rather than clearing agencies. Therefore, the emphasis on settling transactions and ensuring payment delivery distinctly identifies the primary role of a clearing agency in the financial market system.