Investor's wiki

Carrying Broker

Carrying Broker

What Is a Carrying Broker?

A carrying broker is a brokerage firm that gives administrative center support to different brokers. Instances of such support incorporate guaranteeing regulatory compliance, recording and distributing client reports, and monitoring credit risk for margin accounts.

Understanding Carrying Brokers

Brokerage firms frequently depend on carrying brokers so they can zero in on higher-esteem tasks, for example, onboarding new customers or giving high-contact support to existing clients. These client brokerage firms are now and again alluded to as introducing brokers (IB).

Carrying brokers utilize staff and technology that permits them to embrace administrative center work at scale for a network of broker customers. Instead of each broker recreating comparable administrative organizations, economies of scale can be acquired from just outsourcing those repetitive administrative tasks to a small group of carrying brokers. This liberates their broker customers to zero in on income producing activities.

To draw in this business, carrying brokers must market themselves on the quality of their faculty, systems, and history. As is true in numerous businesses, larger and more settled carrying brokers enjoy an upper hand over smaller and fresher ones, which might be considered dubious. This dynamic is due in part to the way that a portion of the activities designated to carrying brokers can have serious legal and regulatory ramifications, for example, guaranteeing that client accounts are not being utilized for money laundering or other illegal means.

Benefits of a Carrying Broker

Of course, there are different factors that clients consider while choosing a carrying broker, beside their size and history. One of the key areas in which carrying brokers must contend is in the breadth and timeliness of the data they can give to their broker customers. The quicker a carrying broker can give accurate data in regards to the transactions, margin status, and collateral level of their account holders, the more valuable that carrying broker will be with respect to the client's risk management activities.

Carrying brokers will likewise contend on the basis of the various markets and product types that their clients are able to access through them. To begin trading on a new exchange or utilizing a rare financial instrument, for example, the carrying broker ought to can oblige this request.

Likewise, carrying brokers will try to keep up with high customer service standards while additionally offering competitive fees. Carrying brokers will frequently furnish clients with dedicated account managers who can determine all issues as they emerge. While dealing with especially large or valuable clients, carrying brokers will frequently arrange special fees, for example, postponing certain margin or transaction costs insofar as indicated levels of volume or assets under management (AUM) are kept up with.

The Bottom Line

Carrying brokers are responsible for performing the point by point transactions shipped off them by brokers addressing firms, either institutional or retail. The carrying broker performs the essential transaction, as well as filling the legitimate desk work, for the benefit of the client who they charge a service fee to for dealing with the transactions.


  • Due to economies of scale, carrying brokers can offer these services to their clients more economically than if brokers somehow managed to inside perform them.
  • Carrying brokers are intensely regulated by financial trading and securities agencies.
  • Competition among carrying brokers depends on factors like industry reputation, the timeliness and exactness of financial reporting, and their fee structures.
  • Carrying brokers are usually associated with and have strong associations with hedge funds and investment banks.
  • Carrying brokers give administrative center support to other brokerage firms, liberating their clients to zero in on higher-esteem activities.


What Does a Clearing Broker Do?

A clearing broker works for an exchange and works with trading among investors and clearing corporations. They guarantee that the trade is set accurately and that the funds are moved in the fitting manner. Since they take custody of securities and exchange them for fiat currency, they are additionally responsible for presenting the desk work associated with every transaction.

What Is the Difference Between a Broker and a Clearing House?

Clearing houses are the ones responsible for facilitating the genuine transaction with the exchanges. This is not quite the same as brokers, who guarantee that the transaction, or trade, is acceptable to them and the company they address. They then, at that point, send that trade to a clearing house, who puts the trade with the relating exchange.

What Is a Carrying Agreement?

As per the Financial Industry Regulatory Authority (FINRA), a carrying agreement is an agreement between two firms that are responsible for securities transactions. In 2018, FINRA discovered that the phrasing encompassing carrying agreements was not adequate, thus they patched up the FINRA manual to better explain carrying agreements. FINRA Rule 4311 administers the broad changes, (for example, prohibiting individuals from going into securities transaction agreements with elements that are not FINRA individuals).

What Is a Non-Carrying Broker-Dealer?

A non-carrying broker-dealer is a broker-dealer that has no custody of its customer assets to file another exemption report that will be surveyed by its independent public accountant. Conversely, a carrying broker-dealer has custody and in this way needs to file a compliance report that is analyzed by an independent public accountant.