Such an agreement has advantages for investors, as they can monitor all orders through a central source instead of having to record records from several different brokerage firms. In addition, an optimized clearing system reduces the cost of commissions and fees and saves time. The terms set out in the typical clearing member trading agreement allow an investor to explore investment options through a number of different brokers. The use of multiple brokers can occur due to several factors. A particular broker may have expertise in a given sector of a market, while another broker may be considered more proficient with options or shares related to another market. For an investor who wants to create a diversified portfolio of stocks, this can be an effective strategy on which different brokers rely on expertise. Industry CMTA Agreement: At present, only one clearing company has entered into a return agreement between the clearing company and the exporting clearing house for transactions. In the coming months, OCC will work with the industry to develop an industry-standard CMTA agreement between OCC clearing members, which will contain specific and agreed terms for the return of a trade and a set timetable for doing so. The end result will be to give exporting companies the certainty of when they will be pulled out of business for a returned trade and to give the carrier companies the confidence to reduce the risks of transfer. A member clearing agreement is a document that establishes an employment relationship between an investor and a brokerage.
The agreement does not prevent the investor from using multiple brokers for derivatives trading. However, the document allows the investor to consolidate these operations with a broker in order to cross transactions. To comply with the terms contained in a Clearing Member Trade Agreement (ATCM), trades must be settled through Options Clearing Corporation. The OCC is responsible for the clearing process of different types of options trading carried out on a number of exchanges. At the same time, the OCC also regulates the listing of new options on the various markets. All OCC activities are conducted in accordance with the rules adopted by the Securities and Exchange Commission. However, when the time comes to execute orders, the clearing member trading agreement allows the investor to consolidate all orders through a broker. This can also be beneficial for investors, as consolidation makes it possible to monitor all orders through consultation with a central source instead of having to deal with several brokerage firms. In addition, the act of consolidating all orders under the terms of a member clearing contract means less time and money for fees and commissions paid for the execution of orders. A clearing Member Trade Agreement (CMTA) is an agreement in which an investor can enter into derivatives trades with a limited number of different brokers, but can consolidate them later at the end of the trading day with a single broker for clearing.
A CMTA is an agreement between different brokers to authorize and process trades from all brokers involved through a single broker. As an investor can have relationships with multiple brokers, he can launch trades with several of them at the same time. But when it comes time to clear these trades, they can settle with a single broker. Without the clearing members` trading agreement, the investor would make trades with different brokers and the trades would be cleared from multiple brokers….