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EXECUTION AND CLEARING
ENGAGEMENT SUMMARY

Client:
Investment bank with non-clearing broker/dealer that offered research, market making and execution in industry sectors. Client service focused on multi-national institutional investors.

Engagement:
This was a two-pronged project. The first one was to evaluate execution activities to ensure that best practices were followed and to recommend changes including reductions in execution costs. The second prong focused on reviewing the client’s current clearing arrangement and improving services and related costs.

Deliverable:
The first prong required evaluating current operating practices and identifying potential areas for improvements. Based on our analysis of the client’s current and historic ECN use and associated costs, we made recommendations to improve internal procedures, reduce ECN usage from nine to three and we provided a strategy to reduce ECN costs.
After assessing the current clearing provider and meeting with the client and provider to review open issues, we performed a competitive analysis on alternative clearing providers and recommended that the client change providers to improve services, establish a strategic technology alliance and reduce clearing costs.

Result:
Implementing our recommendations resulted in improved execution service, better internal communications and a reduction of $750,000 in external execution fees.
Using our recommended clearing services provider resulted in an annual savings of $2,000,000 while increasing clearing services support. In addition, the client avoided the expenditure on internal development projects through the strategic technology alliance provided by the new clearing services provider.


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