Clearing houses aren't usually something an independent broker-dealer (IBD) likes to spend a lot of time thinking about. They want it better, faster, and more advanced than the competition; and they want to know their clearing house is investing in its future as the relationship between clearing house and an IBD is a symbiotic one
Like so many corners of the securities industry, clearing houses are rapidly changing and evolving, indicating that now is an appropriate time for firms considering making a move to give it even more thought. A prime example of a firm driving positive disruption and innovation in the industry is Axos Clearing.
Nebraska-based Axos Clearing is a full-service clearing firm that provides flexible solutions focused on empowering introducing broker-dealers and registered investment advisors to grow their businesses.
Axos: A Clearing House Partner
As Michael P. Scaplen, Senior Vice President of Sales and Relationship Management for Axos Clearing, points out: clearing houses act as partners to their clients.
“A clearing house is the silent partner that resides underneath an independent broker dealer or RIA. It allows them access, not only to the markets to clear their trades, but to a host of technology features. This infrastructure is unique to each clearing house and is used facilitate the business of today as well as lay the foundation for what come tomorrow.”
Further confirming the importance of the IBD/clearing house relationship is the myriad of transactions that clearing houses are involved in. Beyond being an intermediary between buyers and sellers in multiple products, a clearing house offers banking, provides statement confirms and tax documents, execution services, as well as trading applications. Seasoned representatives know this, while those new to the game may not be aware of this. Scaplen paints a compelling picture:
“Clearing begins with moving trades from one location to another, but what Axos has done is build an entire ecosystem around it to provide a holistic user experience that knocks down the barriers that used to limit access to the IBDs.”
Clearing house choice is also exceedingly relevant for IBDs in today's rapidly evolving technological landscape. Firms need cutting-edge tech to retain representatives and their clients. This isn't an area in which firms should be cutting corners.
A strong tech foundation “really makes a clearing house a clearing house. That's what makes them unique; how far does their technology stretch into these different areas and is it preparing for tomorrow’s tech. Does it allow the IBD and their customers diversification across products and platforms? That’s what makes a great partner and that’s what makes each clearing house unique,” notes Scaplen.
Today, a primary difference between clearing houses is some are changing with the times and embracing new products. Some aren't and it's easy to see which group would be more beneficial to firms in the long-term.
Attention to Detail Matters
In this environment and going forward as far as the eye can see, clients want to feel as though they're receiving white-glove treatment. Many firms say that they provide it but are they delivering it? At Axos it’s in our DNA to provide a best in breed holistic digital offering supported by a best in breed service team. This is what elevates Axos above our competition and reinforces the idea of a strong clearing partner relationship.
“At the end of the day, they're choosing a firm like Axos, not just for all of the tangibles that we can deliver and that we do deliver,” said Scaplen. “They're choosing us for the white glove service, right? Would you rather be assigned a relationship manager, somebody who's going to own your account day-to-day, handle your account day-to-day, somebody you can establish a relationship with? Or do you want to go to a firm where you're assigned an 800 number?”
Bottom line: IBDs choose clearing houses and that choice is more important than ever, meaning firms need to emphasize quality, just as they do in investment portfolios.