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The Interactive Brokers U.S. Microcap Stock Restrictions page says:

Execution-only clients (i.e., execute trades through IBKR, but clear those trades elsewhere) may not trade U.S. Microcap Stocks within their IBKR account. (IBKR may make exceptions for U.S.-registered brokers)

How is it possible to execute trades through one broker, but clear the trade through another broker?

When I buy a stock through an online brokerage, I don't see separate "execute" and "clear" steps. Instead, I just click on "Buy" and wait for my order to be filled. Under what circumstances will I need separate "execute" and "clear" steps, and why would I ever need to clear trades through another broker?

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  • Do you have an execution only account setup with IBKR? Why do you think this will ever apply to you? Did some trade you made not go through as expected? – quid Apr 14 at 17:03
  • @quid No, no, and no. I was just browsing the documentation, and I found something I did not understand. – Flux Apr 14 at 17:11
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"Whereas the executing, or introducing, broker is hired by the customer and makes decisions about how to trade securities on the customer's behalf, the clearing firm performs critical back office duties to ensure that the transaction completes smoothly and successfully." According to https://medium.com/prooftrading/choosing-a-clearing-broker-43e230723fa8

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    So there are two kinds of brokers, an executer broker and a clearing broker. – Joseph Casey Apr 14 at 12:51

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