td ameritrade clearing house

Clearing House For TD Ameritrade, Charles Schwab, Vanguard, and Etrade (2022)


List of self clearing online brokers. See which clearing firm is used by TradeStation, Ally Invest, Merrill Edge and other brokerages.



The Role and Function of Clearing Firms Between Brokers and Exchanges


When an investor buys or sells shares of stock from their broker, that order must first go through the clearing firm that is authorized to facilitate the sale on behalf of the stock exchange. For some smaller brokers, the cost and complexity of dealing directly with the exchange is not feasible, and an intermediary is required.

There are clearing firms that are authorized to clear trades for specific exchanges, and brokers will often work with one exclusively for each exchange for consistency and reliability. There are some brokers that also ‘self clear’ and fill the roles of both the introducing firm and the clearing firm on their own if they have the capital and resources available.


Discount Stock Brokerage Firms Clearing Houses


Brokerage Rating Clearing House New Account Promotion
Ally Invest
Ally Invest rating

Apex Clearing Up to $3,000 cash bonus + $0 commission trades.
TD Ameritrade
TD Ameritrade rating

Self Clearing. Forex clearing by KCG Americas$0 commissions + transfer fee reimbursement.
Cash App
3-star brokerage rating

AxosNone
Charles Schwab
Charles Schwab rating

Self ClearingGet commission-free online stock trades.
Etrade
Etrade rating

Self Clearing Get zero commission on stock and ETF trades.
Fidelity
Fidelity Investments rating

Self ClearingNone
Firstrade
Firstrade rating

Apex ClearingGet 2 FREE stocks and $0 commission in ALL trades!
Interactive Brokers
Interactive Brokers rating

Self ClearingUse this referral link to get up to $1,000 of IBKR stock for free!
JP Morgan
J.P. Morgan Chase Brokerage Rating

Self Clearing Get up to $625 when you fund a J.P. Morgan Self-Directed Investing account.
M1 Finance
M1  rating

Apex Clearing Up to $500 cash bonus for funding account at M1 Finance.
Merrill Edge
Merrill Edge rating

Merrill Lynch, Pierce, Fenner, & SmithGet up to $600 when you open a new Merrill Edge account with at least $20,000.
Moomoo
Moomoo brokerage rating

Futu Clearing Get up to 5 free stocks plus a free NIO stock!
Public
4-star brokerage rating

Apex Clearing Get a FREE stock and $0 commission stocks/ETFs/partial shares.
Robinhood
Robinhood Trading rating

Robinhood SecuritiesGet one FREE stock when you open an account.
Stash
Stash Invest rating

Apex Clearing Get $20 bonus stock with this referral link.
Sofi
Sofi Invest rating

Apex Clearing 0% SoFi management fees. Plus, unlimited access to financial planners.
Tastyworks
TastyWorks rating

Apex Clearing $0 commissions + $75 for each friend referred with this referral code.
TradeStation
Tradestation rating

Self Clearing, JP Morgan, RJ O'Brien, and Citibank prime brokers for forex. $150 cash bonus when you transfer funds into TradeStation.
Tradezero
Tradezero rating

Apex ClearingNone
Vanguard
Vanguard rating

Self ClearingNone
Webull
WeBull rating

Apex Clearing 6 FREE stocks valued $34-$12,600 give-away at Webull.
WellsTrade
Wellstrade rating

First ClearingNone
ZacksTrade
ZacksTrade rating

Interactive Brokers LLC Get as low as 3.56% margin rate + $150 ACAT fee refund.


The Role of the Clearing Firm


The process of clearing is largely administrative and custodial. Once the order has been placed by the customer through the broker there are a number of tasks that must be completed. The processing and actual execution of the trade is primary so that the order is filled as requested. The clearing firm makes sure that the other side of the trade is taken, whether a purchase or sale, so that the trade goes through smoothly. There is also a confirmation and settlement process that is completed through the clearing firm, as well as ensuring that all exchange rules have been complied with in the trade.

The clearing firm will also maintain custody of the securities on behalf of the broker, so must have sufficient capitalization to maintain those accounts. Many investors are surprised to receive account statements or notifications directly from the clearing firm after placing a trade, or even monthly statements. Aside from capitalization and stability, most investors are not affected by which clearinghouse is used by a broker and often will not base broker selection on this factor.


Ally clearing firm


Clearing Firm Capitalization and Regulatory Compliance


The largest brokers may have the resources to self-clear, or may have a subsidiary that is their clearing firm. In any case, the process is the same and under protection of SIPC, which insures investment accounts with brokers, subsidiaries and clearing firms. Despite this, at times clearing firms can run into financial difficulty as occurred with Penson Worldwide in 2012, when they had to withdraw as the clearing firm for as many as 14 brokers. This change in clearing firms drew a lot of attention to the role they play and the need for regulatory oversight of these market intermediaries. In that case, Penson became overleveraged with other types of risk that could have affected its role as a stable clearing firm.

There are clearing firms that also handle investment types other than stocks. Trades in futures contracts, currencies through Forex, options and other derivatives are all specialized trading vehicles with unique clearing requirements. A clearing firm that deals with the Forex exchange for example, would have to comply with their standards to facilitate currency trades. For this reason a broker may deal with more than one clearing firm depending on the type of investments offered to customers.


Disclaimer


INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.