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Broker clearing firms

Broker clearing firms list

Kateryna Onyshchuk / Shutterstock

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Updated: January 17, 2024

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As a way of protecting parties in the event of a trade, clearing firms are often used. A clearing firm takes responsibility for the transaction, and guarantees that it will go through in the end. Brokers use them to settle investment transactions. However, it's important to note that some brokers are self-clearing, meaning that they have their own clearing firm while others use a third party to clear the transactions.

In many cases, the largest clearing firms handle a large number of transactions, from various broker-dealers each day.

  1. 1.

    Apex Clearing

  2. 2.

    Broadcort & Merrill Lynch Professional Clearing Corp.

  3. 3.

    FOLIOfn, Inc

  4. 4.

    Goldman Sachs Execution and Clearing LP

  5. 5.

    J.P. Morgan Clearing Corp.

  6. 6.

    National Financial Services LLC

  7. 7.

    Pershing LLC

  8. 8.

    RBC Correspondent Services

  9. 9.

    StoneX

  10. 10.

    Southwest Securities Inc.

  11. 11.

    Wedbush Securities Inc.

  12. 12.

    Webull Financial LLC

  13. 13.

    Open to the Public Investing Inc.

Some of the names on the list are rather well-known and familiar to most people. It's also worth noting that the clearinghouses are protected by the Securities Investor Protection Corporation (SIPC), so it means that you, the investor, have some protection as well.

Which brokerage firms use which clearing firms?

You don't necessarily want to base your decision about a broker entirely on the clearing firm used. It can provide you with some insight into what to expect from that broker.

Here are some of the clearing firms used by some of the major brokers:

Firm Clearing House Self-Clearing?
Ally Invest Apex Clearing No
Ally Invest Managed Portfolios Apex Clearing No
Betterment Apex Clearing No
E*TRADE Morgan Stanley Smith Barney LLC Yes
Ellevest Folio No
Fidelity Go National Financial Services, LLC Yes
J.P. Morgan J.P. Morgan Clearing Corp Yes
Fidelity Investments National Financial Services, LLC Yes
Firstrade Apex Clearing No
FutureAdvisor National Financial Services LLC No
Interactive Brokers Self-Clearing Yes
Lightspeed Trading Wedbush Securities No
M1 Apex Clearing No
MEGI Merrill Lynch Yes
Merrill Edge Merrill Lynch Yes
OpenInvest Apex Clearing No
Empower Pershing Advisor Solutions No
Rize Apex Clearing No
Robinhood Clearing by Robinhood Yes
SoFi Wealth Apex Clearing No
SogoTrade Apex Clearing No
Stash Invest Apex Clearing No
Stockpile Apex Clearing No
Tastyworks Apex Clearing No
TD Ameritrade TD Ameritrade Clearing, Inc. Yes
TradeStation TradeStation Yes
Twine Apex Clearing No
Ustocktrade Electronic Transaction Clearing No
Vanguard Vanguard Brokerage Services Yes
Wealthfront RBC Clearing & Custody No
Wealthsimple Apex Clearing No
Axos Invest Apex Clearing No
Zacks Trade Interactive Brokers LLC No
Webull Apex Clearing No
Public Apex Clearing No
Acorns RBC Correspondent Clearing No

As you can see, many of the biggest brokers are also self-clearing. Even if a brokerage firm uses a clearing company, many of them use subsidiaries that they own outright.

Many of the smaller brokers rely on third party clearing firms to help them make sure that everything proceeds as it should. It takes a certain number of resources to perform clearing services, and many of the smaller companies just don't have those resources.

It is also important to remember that broker-dealers can change clearing firms. So, even if a broker uses one clearing firm now, the broker may switch to another clearing firm later. For the most part, though, the clearing firm isn't a huge deal to the majority of ordinary investors. As long as the clearing firm used is reputable, the focus should be on finding the best online broker to fit your investing needs and preferences.

How do clearing firms make money?

Clearing firms make money by facilitating transactions between traders and another party, like a stock broker. Clearing companies are responsible for ensuring that transactions settle, and in exchange, they receive a clearing fee.

Passive investors aren't too likely to notice these fees since clearing fees are often quite small. However, active traders may notice them add up over time. You can use a variety of discount brokers if you're looking to keep trading fees as low as possible.

Bottom line

While you might not realize it, clearing firms are the middleman that keep trades running smoothly. In fact, the leading clearing houses process billions of transactions annually, which is trillions of dollars in value.

Hopefully, our list of clearing houses gives you a better understanding of what's happening behind the scenes.

About our author

Miranda Marquit
Miranda Marquit, Freelance Contributor

Miranda Marquit is a journalism-trained freelance writer and professional blogger specializing in personal finance. Her work has appeared and been mentioned, in various media, online and off.

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