Insights on the Equity Clearing Market

Goals

To provide insights that help to get a comprehensive overview of the equity clearing market within the USA. The overview should include information on the key players within the market and their market share, regulatory considerations and technology trends within the market, and the current merger and acquisition activities taking place in the market. For brokerage companies, the research should also explain the dynamic of using an external clearer versus acquiring the ability to do self-clearing.

Early Findings

  • As was reported by the Reuters in 2017, the three largest clearing houses in the United States were as follows: CME Clearing, a unit of CME Group Inc; ICE Clear U.S., a unit of Intercontinental Exchange Inc; and LCH Ltd, a unit of London Stock Exchange Group Plc.
  • Some top competitors of Apex Clearing Corporation, along with their estimated annual revenue, are as follows: National Financial Services LLC (US$29 million); Cantella & Co. Inc (US$17 million), Legent Clearing LLC (US$23 million); First Clearing, LLC (US$119 million), G. H. Financials LLC (US$36 million), Nest Wealth Inc (US$13 million), Nextgen Clearing Ltd (US$12 million), and Platform Securities LLP (US$38 million).
  • As far as emerging trends are concerned, The Clearing House, a banking association and payments company owned by the largest commercial banks in the U.S., is lobbying for the introduction of the request for payment (RfP) overlay service which will drive banks to seek out technology solutions, especially for its operations in the customer-facing channels.
  • In 2019, Cboe Global Markets, a financial services company headquartered in Chicago, Illinois, acquired EuroCCP, the largest pan-European equities clearing house.
  • The net value of the transaction was estimated to be at EUR45 million.
  • Some brokerage companies that have their own clearing houses are: Charles Schwab, E*TRADE, Fidelity Go, Fidelity Investments, Interactive Brokers, etc.
  • Some brokerage companies that do not have self-clearing services and use the services of Apex Clearing are: Acorns, Ally Invest, Betterment, Clink App, Firsttrade, Future Advisor, etc.
  • It has been found that many small brokerage firms rely on third party clearing firms as it takes a certain number of resources to perform clearing services.
  • To perform the functions of a clearing agency, entities require registering with the U.S. Securities and Exchange Commission under the tenets of section 17A of the Securities Exchange Act of 1934.

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