WealthManagement Magazine

Small B/Ds Want Their NSCC Link

Conversations continue between representatives of the National Securities Clearing Corp. (NSCC) and some smaller broker/dealers over ways to make some NSCC services more affordable and accessible for small users.But just beneath the surface of the discussions, say many smaller firms, is the nagging fear that ultimately the NSCC will be unresponsive because helping the little guy is not in the economic

Conversations continue between representatives of the National Securities Clearing Corp. (NSCC) and some smaller broker/dealers over ways to make some NSCC services more affordable and accessible for small users.

But just beneath the surface of the discussions, say many smaller firms, is the nagging fear that ultimately the NSCC will be unresponsive because helping the little guy is not in the economic interests of the wirehouses and clearing firms that drive much of NSCC policy.

For almost two years, representatives of smaller b/d groups, including a special committee under the auspices of the IAFP, have been asking the NSCC to create a special information-only membership category permitting them to tap into NSCC networking data. Such a direct link would let non-NSCC members get a better overall look at client holdings and also eliminate some of the need to rely on costly proprietary connections to fund groups.

Although NSCC officials continue to listen to the planners and smaller b/ds, little in the way of concrete action has occurred.

What we hear from the NSCC is that they want to help us but the current weight of industry priorities makes it difficult, says John Simmers, executive vice president of Torrance, Calif.-based Financial Network Investment Corp.

According to NSCC spokesperson Stuart Goldstein, the NSCC, like everyone in the industry, is busy coping with numerous technology issues.

Although many representatives of the smaller b/ds say they accept that line of reasoning, some wonder about the influence of large NSCC members.

The full-line firms that control the NSCC profit from handling our clearing business. Theyre afraid that our gain would be their loss, says one member of the IAFP committee.

Another committee member expresses a similar sentiment.

As far as the clearing firms are concerned, theres just no reason to support the establishment of a low-cost Internet link to NSCC for small firms, he says.

But Simmers downplays that worry, noting, Firms like ours want access to the data that flows through the NSCC, but it does not mean we want to set up major clearing operations.

Yet several executives at major clearing firms admit that the introduction of low-cost, flexible technology is going to affect their businesses.

Everything about the way information and service is provided is being affected by technology, says a marketing official at Bear Stearns Clearing. Theres no question that it is and will continue to pose new challenges to providers of intermediary services.

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