There are a lot of different players in any transaction. The process of buying and selling securities often involves more than just a buyer and a seller. There can be many parties working behind the scenes.
Once you set up and fund a brokerage account, it is very easy to call your broker or place an order online. Within seconds your order is confirmed. However, the actual execution is a lot more complex.
Your broker is most likely working with a clearing broker, who plays an important role to ensure the trade is settled correctly and that the proper records are kept. Your broker will send your cash and securities to a clearing broker to clear the trade. The clearing broker then works with a clearing corporation that matches and settles trades and handles the confirmation and delivery of the transactions.
One of the main jobs of a clearing broker is to confirm all the information given regarding the trade is correct. But their most important role is to manage the funds involved for each transaction. They maintain custody of the investor’s securities and other assets such as cash in the account. Since only about 5% of retail brokerage firms are self-clearing, most work with a clearing broker.
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Finance: What is a Full-Service Broker?3 Views
Finance a la shmoop what is a full-service broker? full-service
"everything" close relative of the bulge bracket remember those guys want
to trade stocks here at this full service brokerage well you got it [Clipboard appears with checklist]
how about trading some bonds yep need investment advice hoo you bet we got rap
accounts here too does it have to be good advice well it's different gonna
retire well they'll suggest Goodyear or fire stone or Michelin if they're you
know socialist and European gonna quit working and play golf all day well then [Man playing golf]
a full service broker has advice for that as well want tax planning yep
referrals to other professionals like estate planning lawyers and that kind of
stuff got a kid heading to college in a decade all right well it's time to talk
529 savings plan got a grandparent dying soon whoo time to talk IRA distributions
and charity need Warriors tickets yeah what well they're full service they just
build they'll charge you for it but they're full full something [State Warriors basketball team playing a game]
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