Clearing, settlement and custody are back office functions that are mostly transparent to the end customer, and to a great deal, the introducing broker. Running a brokerage firms requires a large investment in people and technology, so many firms choose to outsource these functions and other operational functions to firms that specialize in this aspect of the securities business. Penson competes with numerous large banks and financial institutions in providing these services, but Penson is different. Rather than offering a one-size-fits-all package or several different preset packages of services like most of the competition, Penson uses its flexibility to provide customized packages of services to allow correspondents to conduct their business according to their needs and business model. Below is a summary of the overall benefits of outsourcing to a carrying broker:

• Cost reduction, benefit from economies of scaleAccess to industry experts
• Focus resources on core business activities
• Enhance systems & technology
• Risk mitigation

For more information on Introducing/Carrying broker relationships, please visit the Investment Industry Regulatory Organization of Canada website at www.iiroc.ca.