Alpaca Securities LLC as a Carrying Broker Dealer and Clearing for Others Explained

In today's fast-paced and interconnected world, offering seamless access to US stock trading has become a key requirement for many fintech businesses. Alpaca Securities LLC (Alpaca) as a Carrying Broker Dealer and Clearing for others enables partners all around the world to embed US stock trading into their product offerings for their end customers. With a strong focus on compliance and extensive Broker-Dealer operations expertise, we aim to make running and growing partner businesses easier than ever before.

Understanding the Role of a Carrying Broker Dealer and Clearing firm:

As a Carrying Broker Dealer Alpaca maintains the required accounting books and records for the partner firm, we carry all customer and firm assets, we provide certain account maintenance and regulatory reporting on their behalf and we send out customer trade confirmations and customer statements.  In the role of the clearing firm, Alpaca verifies each trade and manages the settlement process to ensure each transaction is settled properly.

Alpaca Licenses and Partners

Securities brokerage services are provided by Alpaca Securities LLC, a member of FINRA/SIPC.

Cryptocurrency services are made available by Alpaca Crypto LLC ("Alpaca Crypto"), a FinCEN registered money services business (NMLS # 2160858), and a wholly-owned subsidiary of AlpacaDB, Inc. Alpaca Crypto is not a member of SIPC or FINRA. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC. Please see the Disclosure Library for more information.

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Alpaca's Supported Partnership Types:

To fully grasp the partnership opportunities with Alpaca, it's important to understand the two main types: fully-disclosed and omnibus relationships. Let's delve into each one and explore the common partnership types we support under these structures.

Fully-Disclosed Relationship: In a fully-disclosed relationship, one firm introduces its customer business to the carrying and clearing firm for the purpose of clearing and settling transactions. The Broker-Dealer executes trades for the fully-disclosed customers and handles the settlement process on their behalf. As a broker partner, you have the opportunity to introduce your customers to Alpaca Securities, utilizing their expertise to execute, clear, and settle trades seamlessly. Through the use of our Broker API the partner is able to customize a front-end application or an app to suit their client needs.

Omnibus Relationship: In an omnibus setup, you must be a registered broker-dealer* and have the ability to manage customer accounting. Under this structure, you receive a collection of accounts representing all your underlying customers and their trade flow. The number of accounts will depend on factors such as long/short positions and the need for various tax withholding rates. Importantly, Alpaca does not receive personal information about your customers, such as their name, address, and date of birth. As the partner, you are responsible for all reporting requirements at the client level.

*Note: If you are a non-US broker-dealer, this may require registration with the IRS as a Foreign Financial Institution (FFI) and getting certified as a Qualified Intermediary (QI) to be certified to manage taxes on the US-sourced income by non-US tax residents.

Now, let's explore the common partnership types supported by Alpaca under fully-disclosed or omnibus relationships:

Fully-Disclosed Support

Registered Investment Advisor (US & International): If you are an SEC-registered RIA with customers within or outside the US, you can introduce your customers to Alpaca on a fully-disclosed basis.

Fully-Disclosed or Omnibus Support

Alpaca welcomes partnerships with US broker-dealers registered with FINRA, allowing them to leverage our APIs to embed investing products and establish individual brokerage accounts. Similarly, international broker-dealers registered in their respective jurisdictions or in countries where customer solicitation is planned can introduce their customers to Alpaca and seamlessly embed US stock trading.

Other Partnership Types

Note: On a case-by-case basis we may be able to support US or International technology providers. For instance, if you are a new fintech app or an established company wanting to offer self-directed customers an opportunity to invest in the US market via your cash management software tools or apps, payment systems, or payroll solutions.

Please contact and submit a sales form here to determine if we can support you as a pure technology partner, as this partnership structure is available only in select countries.

Conclusion

Alpaca helps empower partners worldwide to provide their customers with access to US stock trading seamlessly. With robust compliance measures and a diverse range of partnership types, Alpaca aims to facilitate the growth and success of businesses across the globe. To explore the possibilities of becoming  partner or integrating US stock trading into your offerings, get in touch with us by submitting this form.

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Built with developers in mind, our modern API makes it easy for businesses to embed stock trading into their fintech app.

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Have more questions? Check out this Broker API guide on Licensing & US fintech Regulations with further insights.

This content is for general informational purposes only.

Securities brokerage services are provided by Alpaca Securities LLC ("Alpaca Securities"), member FINRA/SIPC, a wholly-owned subsidiary of AlpacaDB, Inc. Technology and services are offered by AlpacaDB, Inc.

Cryptocurrency services are made available by Alpaca Crypto LLC ("Alpaca Crypto"), a FinCEN registered money services business (NMLS # 2160858), and a wholly-owned subsidiary of AlpacaDB, Inc. Alpaca Crypto is not a member of SIPC or FINRA. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC. Please see the Disclosure Library for more information.

This is not an offer, solicitation of an offer, or advice to buy or sell securities or cryptocurrencies, or open a brokerage account or cryptocurrency account in any jurisdiction where Alpaca Securities or Alpaca Crypto respectively, are not registered or licensed, as applicable.

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