Why don't Retail brokers clear through the big banks.

[CBC]

Hi,

I've noticed that with a lot of the brokers I look they all clear through smaller companies, like Amp, Rjo and Rosenthal. Infact all of them. No1 clears through UBS, Jp Morgan....

Any reason?

 

[patrickrooney]

The bigger banks do not see enough of a profit margin in clearing retail business thus they stay away from it.

 

[speedo]

They may be smaller but they are substantial firms.

 

[patrickrooney]

I agree with @speedo. Unless you need prime brokerage support there's really no reason not to work with the smaller firms where you'll get a better rate.

 

[CBC]

I recon that they do clear with the big banks or there is some connection.

Because on the Eurex participants requirements PDF it says that Eurex only trades with its direct and general clearing members. None of which are American because of Eurex requirements. I think companies like AMP, Rosenthal, Wedbush & Dorman have some sort of setup with the big banks, which are General clearing members.