Canada Brokerage Self-Clears For Greater Control04.01.2013
For the sell side, the move toward self-clearing offers tangible benefits, but also entails risks, which to be handled effectively requires a deep bench of IT and domain experts.
Self-clearing firms have full control over financing their business, optimizing revenue opportunities and determining service and product offerings.
“The benefits of self-clearing for brokers include greater control over their business and faster time to market for new offerings, resulting in an overall competitive advantage,” said Lisa Howes, managing director of Canadian sales at Broadridge Financial Solutions, Canada.
The challenge historically for firms to make this transition work effectively has been the upfront investments needed in both technology and experienced people, and achieving scale in this model more quickly.
In a fully-disclosed relationship, the introducing broker must disclose the identity and other relevant information regarding its client to the clearing broker.
Broadridge supports self-clearing through a combination of global asset servicing, client reporting, reconciliation and clearance and settlement for all product classes.
“Broadridge provides brokerage firms with the underlying technology and services to support their business needs and is a vested partner during the conversion process,” Howes said.
Credential Securities’ conversion to a self-clearing IIROC (Investment Industry Regulatory Organization of Canada) brokerage firm is being powered by Broadridge’s Dataphile securities processing and advisor desktop platform.
Credential’s move to self-clearing provides greater control and more flexibility to expand their investment product offerings to their partners.
“Self-clearing provides Credential with a competitive advantage by enhancing our service offering to clients and maximizing revenue opportunities,” said Doce Tomic, president and CEO of Credential Securities, in a statement. “Broadridge brings deep bench strength in brokerage technology services and domain expertise along with an already robust client base, which provides the necessary level of scale from day one – they provide their expertise so we can execute on ours.”
In addition to implementing Broadridge’s Dataphile for its self-clearing brokerage offering, Credential also selected Broadridge Canada’s Smart Document Fulfillment system, an automated data processing and document delivery service for post-sale fulfillment of transaction confirmations and regulatory Fund Facts and Prospectus documents which facilitates Credential’s compliance with Point-of-Sale (POS) regulations.
The Canadian Securities Administrators requires “Fund Facts” for each mutual fund class or series.
The Fund Facts document represents the first stage of the CSA’s implementation of the point of sale disclosure project for mutual funds. In the second stage, the CSA will publish a proposal to allow delivery of the fund facts instead of the simplified prospectus to satisfy existing delivery requirements under securities legislation.
In the third and final stage, the CSA intends to publish requirements for point of sale delivery of the fund facts for mutual funds; the CSA will also consider point of sale disclosure for other types of publicly-offered investment funds.
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