Third Party Clearing and Settlement
FinClear is the newest provider of Third Party Clearing and Settlement services to the Australian Financial Services landscape.
A General Clearing and Settlement participant of the ASX, our aim is to provide market participants the experience of our expert staff along with the benefits of our technology partners in providing the most advanced clearing and settlement infrastructure in the Australia. Our key deliverables to your firm are;
- Economy of scale in the clearing and settlement of Equities, ETFs, LICs, Warrants and other instruments;
- Reducing your compliance, technology and staffing costs;
- Partnering with you to respond to market and regulatory developments as they occur;
- Providing the latest User Interfaces without the costs associated with development; and
- Focusing on growing your firm by allowing you to concentrate on your core business.
Back and Middle Office Outsourcing
The back and middle office are key functions within the management of risk for your organisations. FinClear outsources our technology to your firm, giving you access to this infrastructure without the costs associated with IT or labour.
To learn more about what we can do for your business, contact us today.
Why is Third Party Clearing Important
Central clearing is a very important part of the plumbing of financial markets. Using a central counterparty reduces risk to both buyers and sellers who would otherwise be exposed to the potentially poor or fraudulent business dealings of their counterparties. Since 1818, central clearing houses have provided important risk and efficiency benefits to their home markets
However, clearing is not accessible for all companies that wish to trade. Registered market participants who wish to be direct counterparties to the central clearing house need to hold significant amounts of capital to be allowed to do so – this is to protect the central clearing house from default. In Australia, the amount required is $5 million, with proposals in with ASIC now to raise this amount to up to $20 million.
For big stockbrokers it makes sense – self-clearing, as this is known, is more cost effective when you are managing high volumes of trades. But for smaller brokers, ring-fencing millions of dollars in capital, buying an expensive back-office system and hiring the people to run it is a prohibitively expensive process when you are only executing small numbers of trades for your clients. Enter the third-party clearer. For a fee, the third-party clearer acts as the counterparty in the broker’s place, holding the required capital and managing the processes between the making of the trade and the receipt of shares or cash.
A healthy third-party clearing landscape supports a healthy financial market overall, allowing for a thriving industry of boutique firms servicing retail investors. Without third-party clearers, many small and medium-sized brokers would be forced to close and investors would have very limited choices in investment management.