Best Practices for U.S. Broker/Dealers: Evaluating Fully Disclosed Clearing Firms

Report Summary

Best Practices for U.S. Broker/Dealers: Evaluating Fully Disclosed Clearing Firms

In today's volatile market environment broker/dealers must develop a thorough understanding of potential clearing providers as a part of their business contingency plan.

Boston, MA, April 27, 2009 – A new report from Aite Group, LLC examines the relationship between broker/dealers and clearing brokers. The report looks at the services offered to broker/dealers by clearing brokers, and guides broker/dealers in evaluating fully disclosed clearing alternatives in a disciplined, process-driven manner.

In today's volatile market environment, a thorough understanding potential clearing providers is an important component of a broker/dealer's business contingency plan. Over the course of the past 18 months, numerous service disruptions have occurred in fully disclosed clearing, and clearing firms have consolidated, changing the face of the market. Aite Group recommends that introducing broker/dealers conduct a high level review of potential alternative solutions every other year, and a detailed review of clearing alternatives when their current relationship changes or there is a change in their business. Broker/dealers should begin their assessment with an internal review, covering strategic direction, tactical practices, and business condition.

"Broker/dealers today face the difficult challenge of managing the viability and growth of a complex and competitive business," says Doug Dannemiller, senior analyst with Aite Group and author of the report. "One part of this challenge for many broker/dealers is maintaining a relationship with a fully disclosed clearing provider. Since these important relationships can turn for the worse in a short period of time, Aite Group advises each broker/dealer to have an understanding of fully disclosed clearing alternatives that is up-to-date and ready for implementation."

This report profiles 16 clearing firms: Emmett A. Larkin Company Inc., First Clearing LLC, First Southwest Company, J.P. Morgan Clearing Corp., Legent Clearing Inc., LPL Financial, Mesirow Financial Inc., National Financial Services LLC, Penson Financial Services Inc., Pershing LLC, Raymond James & Associates Inc., Ridge Clearing & Outsourcing Solutions Inc., RBC Capital Markets Corporation, Southwest Securities Inc., Sterne Agee Clearing Inc. and Wedbush Morgan Securities Inc.

This 30-page Impact Report contains three figures and one table. Clients of Aite Group's Wealth Management service can download the report.

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