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Preparing for Correspondent Woes: Correspondent Clearing Firms Shoulder the Burden of Trade Process

Traders Magazine, February 2000

John A. Byrne

One challenge for small and medium-sized broker dealers making markets in stocks may seem a tad surprising: finding a larger broker dealer willing to clear and process their retail and institutional trades.

The reason: Firms that introduce their stock trading business to a larger broker dealer - known as a correspondent clearing firm - involve them in the potential risks for a default in the clearance and settlement chain.

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