By Craig Ridenhour, President, AtlasClear Holdings

U.S. equity markets have spent the past two years re-engineering the mechanics of settlement. T+1 took effect in May 2024, compressing the standard settlement cycle to a single business day after the trade. And in late June, the National Securities Clearing Corporation (NSCC) went live with 24×5 clearing, extending its central counterparty guarantee across nearly the entire trading week to support the industry’s migration toward overnight and, eventually, around-the-clock trading. These are real achievements, and the largest firms are investing heavily to keep pace. But they sit atop a quieter, structural problem that draws far less attention: a growing number of well-capitalized, well-regulated broker-dealers cannot find a correspondent clearing partner on workable terms. The binding constraint is not technology, and it is not regulation. It is access.

Most broker-dealers do not clear their own trades. Rather than build and carry that infrastructure themselves, they operate as introducing brokers, relying on a correspondent clearing firm to handle settlement, custody, margin, and the considerable regulatory weight that carrying customer accounts entails. For the bulk of the market, that arrangement works well. The strain shows up at the edges, among newer firms, smaller firms, and firms whose business does not fit a standard template.

The supply of firms willing to provide that service has been contracting for more than a decade. According to a June 2025 study by the SEC’s Division of Economic and Risk Analysis, the number of broker-dealers that both clear and carry customer accounts fell from 247 in 2010 to 158 in 2024, a decline of more than a third, even as the assets those firms hold grew, from roughly $4.3 trillion to $5.2 trillion. Fewer clearers now serve the thousands of introducing brokers that depend on them, and the market that remains is strikingly concentrated. Clearing and carrying firms make up only about 4 to 5 percent of all broker-dealers by count, yet they custody roughly 81 percent of total industry assets. The economics behind the retreat are rational. Onboarding a new correspondent is expensive, operationally demanding, and slow to pay back, so many clearers have chosen to focus on large, low-friction accounts and price accordingly.

The weight of that concentration falls hardest on the smallest firms. The same study found that regulatory fees consumed an average of 5.5 percent of total assets for broker-dealers in the smallest size quintile in 2024, against just 0.3 percent for the largest, a nearly twenty-fold gap in relative cost. Fixed compliance and operational expenses that a large firm absorbs without strain can be prohibitive for a smaller one. That is precisely why so many smaller firms need a correspondent clearer in the first place, and precisely why so few clearers judge them worth the effort.

Consider a common case. A broker-dealer with an experienced team and a defined client base wants to add a new line of business. On paper it is easy to clear: adequate capital, a clean regulatory history, a straightforward book. The first clearer declines because projected volume falls below its threshold. The second quotes pricing that assumes the firm will never grow and asks it to fund a technology build. The third is a genuine fit, but its onboarding timeline runs past the window in which the firm needed to launch. Nine months in, the business case has weakened, and the firm is left choosing between unfavorable terms and walking away. Nothing about it was uncreditworthy. The barrier was entirely on the supply side.

The constraint is access

This is not a credit problem. It is a structural access problem. The firms I am describing are sound, regulated, and ready to operate, and they still cannot find a partner on fair terms. Some wait months. Some accept economics that compress their margins from the first day. Some never launch the business they were prepared to build. That is not a market clearing efficiently. It is a market rationing access by convenience rather than by risk or quality.

The friction is consistent. Minimums are set for the clearer’s convenience, not the client’s stage of growth. Integration runs one way, with the introducing firm expected to conform to the clearer’s systems and absorb the cost. Service favors the largest accounts. None of this is malicious. It is the predictable behavior of a concentrated market with little competitive incentive to serve its smaller participants well.

The current wave of modernization only widens the gap. A 24×5 schedule and the operational discipline T+1 demands raise the baseline cost of running a competent clearing firm: more systems, longer coverage windows, less room for error. Firms already reluctant to onboard smaller correspondents now have one more reason to stay with their largest accounts. The top of the stack grows stronger while the firms that need access most find it harder to reach.

Closing that gap does not require new regulation or a reinvention of clearing. It requires firms willing to treat correspondent onboarding as a long-term business rather than an obligation to be minimized. That means pricing scaled to a firm’s stage rather than its size, integration that shares the technology burden instead of imposing it, and a willingness to underwrite sound firms early in their growth. The demand is there. What has been missing is supply willing to meet it on fair terms.

While this chiefly affects smaller firms, it is a problem for the entire industry. Correspondent clearing is the mechanism through which new competitors enter the market. When access narrows, capital formation slows, and the market structure that everyone says they want, more competition, more choice, more resilience, becomes harder to sustain. The attention going to the top of the clearing stack is warranted, but it measures the wrong thing. The test of this market is not how quickly it can clear the firms already inside it. It is whether it can still admit the ones trying to get in. That is less a question of speed than of access, and access is where the next generation of broker-dealers gets built, or blocked.

Craig Ridenhour is President of AtlasClear Holdings (NYSE American: ATCH), a financial services company focused on correspondent clearing and capital markets infrastructure.