In a market landscape defined by increasing speed and complexity, there’s no universal approach to trading success. Why should correspondent clearing be any different?

Today, most market participants clear with brokers that rely on a small handful of closed-source, third-party providers for their core books-and-records functionality. The result is that correspondents have very little control over the infrastructure that defines processes including taking in trades, processing trades into positions, calculating margin requirements and tax lots, generating reports and the like. This lack of flexibility hampers flexibility and innovation and can prevent firms from efficiently carrying out their strategies.

At RQD, we take a different approach. Our modern technology stack and flexible platform enable us to do things that legacy providers simply can’t – and that includes supporting non-traditional workflows, new products, novel approaches and more. With this ability to take greater ownership of post-trade processes, correspondents can increase operational efficiency, differentiate themselves from the competition and ultimately pursue their goals with far greater precision.

Control Is Crucial

One of the defining features of RQD is that we are cloud native and in control of our own code base – a fairly standard configuration for fintechs, but nearly unheard of for clearing brokers.

Relying on third-party providers for books-and-records tools and the hardware they’re hosted on leaves most clearing brokers and, by extension, their correspondents with very little visibility and input into how their data is processed. In some cases, the clearing broker might be able to build a layer to make limited enhancements for flexibility or user experience. But when it comes to the core data, there’s only so much they can do.

This is essential, because while an increasing number of new brokers and trading applications are built on cutting-edge stacks, the majority of clearing brokers use significantly older technology. This requires these correspondents to simplify or “dumb down” their solution, which can greatly extend implementation timelines. In other words, innovation on the correspondent side has greatly outpaced that of the clearing side, causing significant friction for the market’s most innovative firms.

The rise of retail investing is another relevant trend. As this space becomes increasingly crowded, there is a growing need for firms to differentiate themselves from the Robinhoods and Webulls of the world, resulting in new and interesting tactics that may require a more flexible clearing partner.

One more factor is the increasing number of market participants seeking to become omnibus firms. Because omnibus firms handle all customer-facing interactions within their own walls, completing account transfers requires providing their clearing broker with client information it wouldn’t otherwise have, necessitating a dedicated interface. With legacy clearing providers, this custom functionality can take months or be impossible to stand up; with RQD, it’s a quick and straightforward process. With RQD, omnibus firms are able to instruct and respond to ACAT requests via API, allowing them to control the process.

Supporting these emerging business priorities is a major aspect of our custom approach, but it isn’t the only one. We strive to serve in a true partnership capacity to our clients – and that means liberally sharing our expertise on technology, risk and the industry at large. We have a keen understanding of operational best practices, regulatory priorities and other factors that can play a significant role in a firm’s trading success. In this way, our clients benefit not just from customizable technology, but also clear guidance on how to make the most of that customization.

Flexibility in Action

This combination of cutting-edge technology and industry expertise has enabled us to deliver custom solutions for a wide array of clients. The solutions we’ve built are as diverse as the clients we serve, but the common thread is greater efficiency and an enhanced ability to serve their own customers.

In one instance, a correspondent wanted to fully outsource its exchange fee calculations, including customized fees based on liquidity indicators received from exchanges. While this is typically done by the introducing broker, we were able to implement a powerful matrix that met the client’s needs, saving them from this highly technical work while empowering them with full control.

Another solution that we have implemented is pre-funding functionality, enabling the client to identify a set pre-funding threshold for inbound ACH. Instead of waiting multiple days for transfers to clear, we can instantly credit the customers’ accounts up to a certain amount, effectively enabling instant trading.

Other clients are working to support new asset classes and similarly innovative products. Beyond the technology, we also approach our pricing schedules in a custom and flexible manner to match whatever revenue model our clients are operating from.

We can support and streamline any and all of these priorities – and it’s all thanks to our unique tech stack, experienced team and custom approach.

Conclusion

If innovation and differentiation are keys to success in today’s markets, then legacy clearing providers inherently serve as obstacles to that success. “Good enough” isn’t good enough if it hampers your ability to achieve your vision and stand out from the competition. At RQD, we pride ourselves on offering the technology, people and support necessary for our clients to chart their own course, no matter what that may look like.

In continuing to hone our custom approach, we hope to not just aid our clients, but by extension bring about better outcomes for investors, greater market efficiency and innovation across the industry.

Interested in learning more about how we can build a solution that meets your every trading need? Get in touch with us via info@rqdclearing.com

The post ​​To Thrive in Modern Markets, a Custom Approach to Correspondent Clearing Is RQD appeared first on RQD*.

The post RQD* Clearing Partners with Valuable Capital to Provide US Market Access and Clearing Solutions to More Than One Million Asia-based Retail Investors appeared first on RQD*.

The post RQD* Clearing and TradingBlock Expand Relationship to Include Full Clearing and Execution for Retail and Active Trading appeared first on RQD*.

Sanocki has a legal background with stints at a large New York-based law firm, the Securities and Exchange Commission as well as US options exchange ISE, ultimately bought by Nasdaq in 2016. In the past five years he has been leading the legal and compliance programs at Volant Liquidity, a SEC-registered options market maker. He recently became the CEO of RQD Clearing, the clearing firm spun out of Volant in 2021.

RQD is built on cloud native tech using Microsoft Azure. Compared to other clearing firms, RQD has technical advantages such as controlling its own code base and not being constrained by vendor technology, explained Sanocki. Along with that come benefits related to real-time data and a testing environment that mirrors the production environment, the latter which makes it easier for onboarding firms to integrate. Sanocki added that another advantage is “a flexible system to support differing client needs” and that the tech is backed up by a team with expertise in operations, development, and compliance for clearing.

RQD has been onboarding clients since exiting stealth mode in November 2021 at a rate of “several clients each month” and has a “long pipeline of clients that we expect to continue through to 2023”, he added. There are three categories of clients: retail broker-dealers, active traders and institutional. An announcement detailing some of the relationships is expected in Q2.

While integration is straightforward, Sanocki noted that moving away from a clearing firm can be difficult, with a 3- to 6-month cycle between contract negotiations, technology integration, testing, and production. Currently, RQD’s focus has been on broker-dealers that have retail accounts, in part because of the growth of new brokers such as Robinhood and Webull, for example. Initial products are US equities, options and ETFs, with a horizon view to expand to fixed income and mutual funds.

Real-time compliance

Becoming a clearing firm requires going through a lengthy approval process with FINRA, DTC and NSCC for equities clearing and settlement, and OCC for options. Even as a start-up, all compliance requirements are equal to those of any large market participant under SEC and FINRA regulations, said Sanocki.

Moreover, clearing firms face greater scrutiny than any other participant, in part, because they hold customer funds and securities. He added that RQD’s “number one priority is to make sure customer funds and securities are properly segregated and that we keep proper records of cash and securities moving in and out of customers’ accounts.”

Internally, tapping into real-time data eases several compliance and operational burdens. Anti-money laundering checks, for example, can be done quickly and accounts can be opened in seconds. Another aspect of real-time data benefits reporting and internal analysis capabilities for both RQD and its clients. Bespoke reports, which are augmented by push notifications, can be developed and pushed to production the same day.

Sanocki describes the compliance approach as “proactive and high touch”, some which relates to “having an organization-wide culture of compliance and strategy for working closely with clients on compliance related matters.”

For the execution arm of the business, to monitor market abuse, RQD has an external relationship with trade surveillance software firm Trillium to detect manipulation and other prohibited activity. Data protection is backed up by Microsoft for cybersecurity and encryption protocols. For margin and collateral requirements, RQD has real-time risk monitoring, with a model that keeps track of market volatility, concentration risk, and liquidity risk.

“If (clients) have a customer that builds up too big of a risky position and blows out, they can end up losing a lot of money…So being able to see all that in real time is a huge value add,” Sanocki said.

To read the full article, click here.

The post Securities Finance Monitor: Cloud and Real-Time Data Tech Levels Playing Field for Challenger Clearing Firms appeared first on RQD*.

Clearing firms are not interested in low latency in the same way the front office is—i.e., how fast a trade can be done. For them, the technology burden is about scale and capacity, the ability to ingest this data reliably and quickly, and reflect it back to their counterparts efficiently, says RQD CTO Jon Fowler.

“The interesting part here is that’s really where most of the risk, or at least a lot of the risk, lives,” he says. “Especially when we’re talking about increased volumes, and especially with options then being leveraged and derivatives themselves, it doesn’t take much slippage to find yourself in a big hole.”

When it launched, RQD wanted to be able to perform all risk management, reconciliations, and monitoring in real time. With that goal in mind, Fowler and his team built the company’s system using its own codebase and with the ability to ingest data from its clearing correspondents in real time. Many back-office providers, in contrast, often bolt their services onto legacy mainframes or clunky databases, Fowler says.

To read the full article, click here.

The post WatersTechnology: Tech Vendors Rethink Risk in Era of Surging Options Volume appeared first on RQD*.

Bridgeford comes to RQD with more than 20 years of experience in the securities industry, most recently as chief compliance officer for Axos Clearing LLC, where she was responsible for directing the firm’s compliance operations. Prior to Axos, she was a compliance officer at Securities America, Inc., and has also held numerous senior compliance officer and operations manager roles throughout her career. She graduated from the Nebraska College of Business and is Series 7, 63, 99 and 24 qualified.

In her role as Chief Compliance Officer, Lisa will utilize her expertise in clearing, prime brokerage, compliance technology and surveillance protocols to manage all aspects of RQD’s compliance program.

“RQD continues to expand its team to meet our growing client demands amid the ever-evolving regulatory landscape, and we’re excited for this next phase of growth,” said Michael Sanocki, CEO of RQD. “Lisa’s addition to the team further strengthens our already unparalleled bench of clearing expertise and will add tremendous value as we deliver the technology, solutions and business model today’s brokers expect from a correspondent clearing partner.”

“My primary focus as Chief Compliance Officer is to provide regulatory and risk management guidance that will contribute to the firm’s overall success as RQD continues to provide advanced clearing, custody and execution solutions built for the modern markets,” saidLisa Bridgeford Chief Compliance Officer of RQD.  “RQD is pioneering the industry as the first clearing solution built entirely on cloud-native, real-time technology, and I’m eager to contribute to the company’s success.”

This news coincides with RQD’s recent team expansion, which includes the addition of three new hires following the company’s official launch in November 2021. Hallie Cody joins RQD from JP Morgan as a Compliance Officer and will support RQD’s day-to-day compliance activities. Troy Thompson is joining as a Software Engineer and will contribute to technology development. Anthony DeRosa is joining the firm as Accounting Manager and will look after the firm’s financial operations.

###

About RQD*

RQD* Clearing is a next-generation correspondent clearing provider, providing advanced clearing, custody and execution solutions built for the modern markets. With the industry’s first solution built entirely on cloud-native, real-time technology, the firm can quickly and seamlessly enhance the platform, mitigate emerging cybersecurity threats and offer a more efficient implementation that scales as clients grow. Supporting U.S. equities, options and ETFs, RQD caters to broker-dealers that service retail, institutional and active traders, foreign financial institutions and proprietary trading firms. For more information, visit www.rqdclearing.com.

Media Contact

Jed Hamilton

Forefront Communications for RQD

212-380-7455

jhamilton@forefrontcomms.com

The post RQD* Names Veteran Compliance Executive Lisa Bridgeford as Chief Compliance Officer appeared first on RQD*.

Spun out from Volant Trading, RQD supports U.S. equities, options and ETFs, and has three main components – clearing, custody and execution services – all of which are accessible by advanced API. The clearing and custody solutions are fully hosted on Microsoft Azure, eliminating the need for any on-premise infrastructure. Both are highly scalable, offer real-time trade reporting through a web-based GUI and enable automated, paperless account opening.

The colocated trading execution services include smart order routing, an advanced suite of algorithms and ultra-low-latency direct market access (DMA). 

Michael Sanocki, CEO of RQD Clearing, said the industry has been waiting for this type of advanced technology.

To read the full article, click here.

The post Forbes: RQD Clearing Launches Real-Time Cloud-Based System appeared first on RQD*.

Thus RQD’s mission is to reach out to firms that are “sorely underserved” and “ripe for disruption.” RQD, which officially launched last month, offers a suite of clearing, custody, and execution solutions for broker-dealers in the retail and institutional realms, and for active traders, foreign financial institutions, and proprietary trading firms.

The RQD platform has been live for six months and has been used by multiple broker-dealers for clearing U.S. equities, options, and exchange-traded funds (ETFs), accessed via an application programming interface (API). The cloud-native solutions are hosted on the Microsoft Azure cloud computing platform. Sanocki oversees the strategy and company-wide operations at RQD. FTF News recently got time with him to learn more.

To read the full article, click here.

The post FTF News: Clearing is Broken: Q&A with RQD*’s CEO appeared first on RQD*.

Michael Sanocki, chief executive of RQD, said the clearer was spun out of Volant Trading, an established market maker with regulatory approval. However, RQD had to file a continuing membership application with FINRA and also do testing with the DTCC, the US clearing infrastructure.

Sanocki told Markets Media: ‘That entire process took about a year and part of that was demonstrating the entire system.”

To read the full article, click here.

The post Markets Media: RQD Aims to Revolutionize Clearing with Cloud appeared first on RQD*.

“Clearing, for lack of a better word, is broken. Legacy clearing firms have failed the market,” Sanocki told Traders Magazine.

Today’s clearing and custody solutions leave correspondents with increased risk, additional costs, minimal support, and an overall inability to meet the needs of modern financial institutions, Sanocki said.

He added, that modern technology, flexibility, efficiency, and real-time solutions are what’s required to fix it. 

Sanocki mentioned cloud-native, server-less architecture that allows seamless customization and extension as well as real-time APIs to provide an ‘of the moment’ view into more than just account openings and transfers, but real-time margin, positions, balances and risk. 

To read the full article, click here.

The post ​​Traders Magazine: RQD Brings Change to ‘Broken’ Clearing Industry appeared first on RQD*.