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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
qSpark provides the broker, or clearing firm, with what's needed to monitor trading, including end-of-day files, consolidated audit trails, archiving and so on.
O'Brien & Associates (RJO), an independent futures brokerage and clearing firm in the United States, has said that it has appointed William Harrington as managing director, global head of Internal Audit.
Cambridge developed CLIC Advisor in conjunction with eMoney Advisor to offer advisors a fully integrated set of client- focused, digital financial services based on deep integration and bidirectional data between Cambridge's digital workstation and key features advisors seek via fintech providers plus integration with clearing firm partners.
(NYSE: AX) subsidiary Axos Clearing, LLC has closed the acquisition of the parent company of Nebraska, US-based securities clearing firm COR Clearing LLC, the company said.
By creating the new Clearing Firm Advisory Committee and Capital Acquisition and Placement Broker Committee, FINRA said it hopes to "gain important feedback from these member-firm segments, including with respect to issues facing small firms whose customer accounts are carried at clearing firms and small firms engaged in capital-raising activities."
Cognizant (NASDAQ: CTSH) has been selected by global clearing firm ABN AMRO Clearing (AACB) as its strategic partner to cloud-enable its global IT infrastructure and lay the foundation for digital transformation, 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.
This will allow the Bank to remain at the forefront of the evolution in the capital markets and post-trade services, through the leading positions of Newedge, a premier global agency broker and clearing firm, offering leading, multi- asset brokerage services across a broad range of listed and over-the-counter (OTC) derivatives and securities.
Verma is a former employee of a cargo and clearing firm in Mahipalpur.
When confronted, the advisor falsely claimed his clearing firm was Goldman Sachs, which had no record of business dealings with him.
Engineers from explosives clearing firm BACTEC started work this week to search for any undetected devices since German air raids on the city.
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.

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