Dealing directly with clearing firm...

Discussion in 'Prop Firms' started by risktaker, Dec 11, 2008.

  1. Any of you guys have an "account" directly set up with a clearing firm? In other words, bypassing the broker altogether?

    I'm in contact with a clearing firm about setting something up along those lines and am wondering what I should be on the lookout for, especially regarding my capital. How are customer funds usually handled?

    Does anyone have any advice on this subject?
  2. Just be aware that there is a gigantic difference between "clearing firms" ..... If you're talking Goldman or Merrill, then fine...lower tier firms bring about a lot of risk, both in order exectution and fiscal reporting. In the current climate, be extra careful. You'll likely need to buy an Exchange membership, and become your own broker dealer...not a big deal obviously, just a bit costly. You'll need a good Compliance Officer for sure.


  3. cstfx



    Isn't it also true that dealing with clearing firm directly, funds no longer fall under the umbrella protection of SIPC? I see alot of guys here with this belief that SIPC is the "everything" safety net, but that is only for retail accounts.
  4. meir13


    I think you can do it with NewEdge. Quite a big firm. Starting with accounts from USD 1 million. But dont expect any hand holding there.
  5. lol don thats a good one. mer was 1 day short of bk just like leh if it wasn't for bac. an your vaunted gs has been brought to there knees because of the use 30-1 leverage. bottom line no clearing firm nor broker has escaped the wrath. as long as my money's sipc insured i'm as safe at any clearing firm as gs.
  6. ProTrade Greg

    ProTrade Greg ET Sponsor

    Here are two big advantages of using an Introducing Broker Dealer (IBD) and NOT the clearing firm directly:

    1. Economies of scale. The IBD will negotiate better rates with a clearing firm due to the larger amount of order flow and usually that means lower rates for clients.

    2. Customer service. I wouldn't expect to be treated the same at a larger clearing firm (who primarily works with brokerage firms). You'll receive much better customer service at a smaller IBD, and in this market, customer service is paramount! Look for a support department that can provide instant market intelligence and color and preferably one that is a member of a major stock exchange, this provides increased credibility.


    Greg Davis

  7. Don.

    With all due respect...ARE YOU HIGH!!???

    GS and ML are as risky as any of the "smaller firms" give me a break....You don;t see Penson or Wed Bush asking for a gov't bailout do ya?
  8. Well, it's always great to have an experienced guy like Don respond to this type of question!

    Don, but I was under the impression that if I work directly with a clearing firm that executes the trades then I would NOT need any exchange membership?

    I'm looking at trading stocks in Europe and getting setup with a Europe-based clearing firm and they're saying $100K-$150K would be acceptale to begin trading.

    They're NOT a retail broker and do not take regular retail business and seem to be well respected by the trading community.

    What am I missing here?

    Thanks guys. I appreciate all the responses!

  9. Hello, yes, thank you... I've been looking for an IBD that provides color. It is so important. Thank you for emphasizing this!
  10. If you are a member of the NYSE you can go direct to a clearing firm. I think the CHX also offers it....
    #10     Dec 11, 2008