Many firms. Depends on their business model. For example Interactive has a decent sized institutional business where it acts as an IB and trades are given up to clearing firms.
so if you are with an IB that is with more than one clearer - is your account monies held by the clearer or the IB? - who do you fill out your accout forms with?
craigross so what does the guarantee cover? since your money is with the clearer whether the broker is independent or guaranteed
the inst. business routes through the IB servers/applications and is given up to the clearing firm of their choice. Money is not held by IB for this business. However, IB does require the clearing firms to set limits on each account. Usually tri-party agreements are used for this type of business.
craigross so are you saying that the guarantee is really something that favours the guaranteed IB and is a way for the clearer to get an IB to use just one clearer, since the clearer takes away the downside for the guaranteed broker - wheras an IB who uses more than one clearer would have to take the hit if one of the IBs clients defaulted
def i guess that takes me back to my original point - that the viability of a broker - does not affect the upgrading of equipment etc - since that is the clearers responsibility
Not true. Another example. Interactive does not clear all of its business in all markets. It owns the exchange seat, owns the hardware, does the execution, etc. At days end it just gives the trades up to the clearing firm who does the clearing for IB. In cases like this, the clearing firm has no responsibility for the brokers software, hardware, etc. There are other cases where broker A will use IB for executions (IB via front end or back end software) and IB will give the trades back to the broker who does their own clearing.