5 Things to Consider Before Renewing Your Clearing Firm Contract

It’s a new season and change is in the air. Are you taking stock of your vendors, service providers, and existing contracts? If your contract with your clearing firm is due for renewal, we have a few suggestions about what to consider when reviewing, renegotiating, or replacing contracts.  

1. Relationships

You might wonder if a personal touch still matters as businesses shift toward automation and self-servicing. Despite all the digitization of the financial services industry, in some situations, you still need to speak to an actual, live human being. Those situations are often abnormal and urgent, so talking to someone who knows you and your business can make a huge difference when resolving an issue.

Here at Axos Clearing, we’re committed to providing a personalized, white-glove service to all our correspondent firms. You have a dedicated team who not only knows your name but understands your firm and needs. As a result, we offer rapid, customized solutions to any issue that might arise. There’s no need to waste time telling your story to a stranger when you contact us for help.

2. Service Level Agreements

Your contract should clearly describe the services that your clearing firm does and does not provide. Some of the standard services include executing orders, generating and preparing confirmations, providing monthly statements, and settling contracts and transactions.

Is your firm delivering the agreed-upon services within the right time frame? Delayed execution can cost you and your clients money. Failure to provide statements and confirmations can violate regulations. Compare what your firm has promised against their performance.

3. Product offering

A modern clearing firm can provide much more than trade execution and custodial services. They can be a true business partner offering services to help you streamline your company processes and create efficiencies. Your clearing firm could offer various value-add products and services including compliance tools, market research, and customizable account management platforms.

4. Technology

These days technology is the name of the game in financial services. Your clearing firm could be developing and implementing competitive technology ranging from APIs (application program interfaces) and real-time data management to workstations and account management platforms. Does your clearing firm provide responsive and value-oriented technology?

5. Price

Are your transaction and brokerage fees reasonable and competitive? Is your firm nickel-and-diming you for every add-on service or unexpected need? Regulations require firms to be transparent about fees and charges.

Contract review is time consuming. However, taking the time to make sure that your clearing and custodial firm, plus your other providers, are delivering what you need and meeting your expectations at the right price is an essential practice.

Here are a few tips to streamline your contract renewal process:

  • Allow enough time to review your contracts.
  • Check to see if obligations were met correctly and on time.
  • Review any concerns that were brought up during your contract period and their resolutions.
  • Ensure all contact information is up to date.

If you’re looking for a new clearing firm and want personalized attention, access to technology, and tailored, value-add products, give us a call.

Related: Technology Drives Innovation in Clearing with Michael Scaplen