DEFINITION of 'Carrying Broker'
A commodities or securities broker who provides back office functions such as clearing, settlement and custodial services to other brokers. The carrying broker therefore enables other brokers, known as introducing brokers, to provide full service to their clients without incurring the huge start-up and maintenance costs of running a back office. Introducing broker/carrying broker relationships have existed in the United States since the mid-1970s.
BREAKING DOWN 'Carrying Broker'
The benefits of using a carrying broker include cost efficiencies, economies of scale and risk mitigation. It also allows the introducing broker to focus on its core competencies, such as portfolio management, client relationship management and marketing of products and services.
Carrying brokers also provide additional services, such as maintaining records of client transactions and preparing and distributing client statements and confirmations. Some carrying brokers even provide financing for client margin accounts.