What is a Clearing Member Trade Agreement?
A clearing member trade agreement is a document that establishes a working relationship between an investor and one brokerage house. The agreement does not preclude the investor from using multiple brokerage houses to executive derivative trades. However, the document does make it possible for the investor to consolidate those trades with one broker for the purposes of clearing the transactions. The terms included in the typical clearing member trade agreement make it possible for an investor to explore investment options through a number of different brokers. Utilizing multiple brokers may occur due to several factors. A given broker may have expertise with a particular sector of a market, while another broker may be considered more proficient with options or stocks associated with a different market. For an investor who wishes to create a diversified stock portfolio, drawing on the expertise of various brokers can be an effective strategy. However, when the time comes to actually exe
Related Questions
- If a clearing firm executes a trade on behalf of a correspondent, and there is no give-up agreement in place, how is reporting accomplished?
- How does the SORT TESTSM help the investor and Financial Planner to select investments that fit the investors risk tolerance?
- What is a Clearing Member Trade Agreement?
