Correspondent Clearing is a trade capture position movement service that allows a participant to move a position from an executing broker's account (special representative) to a different clearing broker's account (correspondent).

Overview

Correspondent Clearing is a trade capture position movement service that allows a participant to move a position from an executing broker's account (special representative) to a different clearing broker's account (correspondent). This service allows a broker-dealer to use one broker-dealer for an execution and another for clearance and settlement. All NSCC-eligible equities and corporate bonds can be transferred using this service.

Since Correspondent Clearing transfers settlement obligations for correspondents, it mitigates risk by reducing the number of redeliveries as well as the number errors in accounting and settlement.

Who Can Use the Service

The service is available to NSCC members.

Benefits

The service provides a number of operational advantages:

• Correspondent Clearing allows participants to move a position from an executing broker's account to a different account for clearance and settlement. This service allows a broker-dealer to execute a trade through any other broker-dealer and still settle the trade in its own account.
• Correspondent Clearing allows users to settle institutional block trades in NSCC's Continuous Net Settlement System, so that one trade can be apportioned to a number of different firms.
• Intra-day output is reported hourly to participants on the 400-byte universal trade recording machine-readable output.

How the Service Works

Correspondents route trade orders to special representatives to execute trades on their behalf. After the execution, the Special Representatives submit offsetting trade information via Correspondent Clearing to NSCC, thus moving the position to the clearing broker's account. NSCC ensures there is a signed agreement between the special representative and the correspondent prior to accepting the position movement instruction.

Correspondents that are NSCC participants settle trades with NSCC. Both Special Representatives and correspondents receive the Correspondent Clearing Blotters, which itemize the positions submitted into the correspondent clearing service.

For More Information

Please call Relationship Management at 800-422-0582.