Brokerage clearing services are offered by clearing brokers who play a vital role in the securities market. Their extensive knowledge helps to ensure that the system works as efficiently as possible and that transactions can be depended upon to be completed. As well as handling orders, they also provide safe custody of an account holder’s securities.

What is a clearing broker?

Clearing brokers play a key role in the global clearing process, providing a range of prime services that facilitate the smooth execution of transactions in financial markets. They provide a key set of liaison services between investors and clearing corporations.

What does a clearing broker do?

Clearing firms work with clearing brokers to ensure that any transactions happen smoothly and efficiently. They help to ensure that all trades are appropriately settled and the transaction, at least from a functional point of view, is entirely successful. 

Once an order has been executed, the clearing broker will work with the clearing firm to make sure that all funds are handled appropriately. They ensure safe custody and make sure that funds are transferred as and when required to successfully complete the transaction.  

They also ensure that all of the appropriate paperwork is completed and in place. This will include maintaining customer books and records. 

As well as clearing trades, clearing brokers undertake extensive research to clarify that the information that they’ve been given is correct. Anyone who works as a clearing broker will have a deep knowledge of the securities market, and this knowledge is a tangible asset when it comes to the safe, efficient and secure running of the market.  

Managing assets

In addition to handling buy and sell orders, clearing brokers also maintain safe custody of account owners’ securities and other assets. The responsibility placed on the clearing broker in the system underscores the importance of competence, reliability and industry knowledge that is required of clearing brokers.
 

Extending credit

Clearing brokers can also extend credit to customers to financial transactions as well as ensuring safe custody of client assets. They do this by means of margin accounts. A margin account is a type of brokerage account in which the broker lends their client the funds required to purchase financial assets. 

The clearing broker in effect makes it possible for the customer to use leverage which will help to magnify their end profits. Conversely, it can of course serve to increase potential losses.

Clearing brokers compared to other brokers

In comparison with clearing brokers, other kinds of broker-dealer, such as introducing and investment brokers, don’t have the same level of authority to clear transactions. Other broker-dealers will usually work with a clearing broker in order to be able to clear their trades. 

Clearing brokers play a key part in the infrastructure that ensures trades take place efficiently and reliably.

A complete prime broker service in the Asia-Pacific region

GIS UK & HK offer transparent and efficient post-trade, safe custody, global clearing and prime services across multiple currencies. Over the past three years, GIS UK, have administered 250,000 transactions with settlement values exceeding £50 billion. Our efficient, transparent and trustworthy services give you the time and confidence to focus on your key competencies.

Our clearing and safe custody services are focused on the real needs of our clients and are backed up by a strong regulatory framework. With a team that possesses unrivalled levels of experience, the clearing and safe custody services offered by GIS HK Ltd are industry-leading.