Clearing firm

Clearing Corporation

An agency or corporation on an exchange that settles transactions for a fee. Most exchanges have one or more clearing corporations that are charged with matching orders together, ensuring that delivery is made to the correct party, and collecting margin money. Because so many trades take place on an exchange in a given day, clearing corporations exist to process what each party owes or is owed in a central location so that the fewest securities and the least amount of money actually change hands. For example, suppose that a broker-dealer buys 1,000 shares of a security and then, in a completely separate transaction, sells 700 of the same shares. At the end of the trading day, the clearing house would determine that the broker-dealer must only buy 300 shares as the other 700 belong to another party. Clearing corporations receive a clearing fee in exchange for these services.

Clearing firm.

Clearing firms handle the back-office details of securities transactions between broker-dealers, making the settlement process streamlined and efficient.

In brief, when a broker's order to buy or sell a security has been filled, the clearing firm electronically compares and verifies the details of that trade. Then it nets down the trades to minimize the number of securities that must be received or delivered at settlement.

Cleared trades are settled within a specific time after the trade date, based on the type of security being traded.

References in periodicals archive ?
O'Brien & Associates (RJO), an independent futures brokerage and clearing firm in the United States, has said that it has appointed Elena Patimova as senior vice president, Business Development within its London-based affiliate, R.
Leading wealth management technology solution provider FolioDynamix announced its partnership with Apex Clearing, an independent, full-service clearing firm, to usher in a new wave of customer-centric investment technology in the wake of the DOL Fiduciary Rule, the company said.
For example, a clearing firm commonly charges $1 for postage and handling fees, and the broker-dealer charges between $4 and $7.
Until a few years ago, he explains, no custodian or clearing firm had services geared to retirement plan advisers; the focus was on wealth managers.
as reps and B/Ds seek more efficiency and to offer more and better services to clients, technology platforms like NetX360 with its Black Diamond reporting software from the biggest clearing firm, Pershing, can make a serious difference.

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