What is ‘CMTA’?
‘CMTA’ or ‘clearing member trade agreement’ refers to an agreement or understanding between one investor and more than one broker or brokerage firms with the intent of consolidating all possible trade orders for a single broker later. This agreement involves a document that has to be signed by the investor and the brokers involved. In this way, the investor may deal with multiple brokers for different options, and when the time comes to finalize the trade order, this particular investor may choose to consolidate his/her dealings with different brokers into a single brokerage house, for example, to finalize and/or clear the transactions.
Through the CMTA, would-be investors will have lots of options when it comes to investments and trading. By dealing with more than one broker, the investor will have a better picture of the investment environment. By simply being in contact with multiple brokers, investors will have better details and information that could help him/her finalize an investment option.
Being involved in a CMTA is also advantageous to the investor in the sense that not all brokerage firms and houses are experts in the various segments of investing. One brokerage firm, for example, may be the best option for a specialty market segment while another may be the best option for stock-related investment options. By consulting with the expertise of different brokers, investors will gain much more information needed before finalizing any investment option. And when all investment options are thought about and consulted with various experts, the CMTA is the best way for investors to clear his/her transactions with a single brokerage firm. And with just one brokerage firm to deal with at the final stages of the investment process, the investor will also gain the advantage in terms of lower fees and faster processing times for the investment option to be finalized and cleared.