Two brokers, use just one clearer?

Discussion in 'Order Execution' started by benwm, Feb 20, 2011.

  1. benwm


    I use Interactive Brokers for execution and clearing but am considering opening an account with Open E Cry. In part, because I can't stand IB's ripoff cancellation charges on Eurex, but also because it's obviously prudent to have a back up broker.

    Does anyone use two or more brokers for execution but arrange for one of the brokers to handle all of the clearing side?

    Maybe for just two brokers it's not such a big hassle, but if you used half a dozen different brokers you might want to use a single clearer. Suppose your connection with IB went down, and you had to hedge a position with an offsetting one through the other broker. If a single agent handled all the clearing maybe you could somehow offset the positions and not have to close out the two (offsetting) legs? And not have to stump up double margins?

    If it is even possible for IB to clear the Open E Cry executions, would the IB statements also include the other broker transactions on a single consolidated report?

    Thank you in advance for any replies on this exciting topic. :)
  2. cstfx


    In order to do this with IB (and probably just about everyone else), you need a prime account and the minimum for a prime at IB is 500k.

    You also have to take in consideration the take-up fees for the clearer from the execution broker(s) which can add significantly to your cost.
  3. benwm


    Thanks cstfx
    That rules me out for now, but good to know for future.
  4. bone

    bone ET Sponsor

    The other broker will charge a "give up agreement " fee to route the trades to another clearing firm.

    And that haircut usually ain't cheap.