RQD* Raises $74 Million as Fidelity Exits Smaller RIAs

RQD* Clearing raised $74 million in a minority investment led by Bain Capital Tech Opportunities, giving the New York-based clearing and custody firm capital to expand its U.S. client base.

Bain’s fund invested in late August. Existing investors ABN AMRO Clearing Bank and Nyca Partners also participated. Fidelity Investments has told registered investment advisers that place less than $100 million with the firm that they must leave its custody platform by July 2027.

RQD provides clearing and custody services to about 50 U.S. advisory practices and other wealth management firms through registered investment advisers, brokerages and turnkey asset management platforms. The company has not disclosed its assets under custody or standard pricing schedules.

Michael Lanyon, RQD’s chief revenue officer, described the firm’s U.S. wealth management business as being in its early stages. He joined RQD in December 2023 after serving as global head of sales for the clearing business of Apex Fintech Solutions.

RQD is seeking advisory businesses that want more control over their client and adviser experience, Lanyon said. Those firms may develop their own products and services and offer smaller accounts access to strategies such as direct indexing and long-short investing.

“There is an opportunity to find the right blend of economics and say, ‘Can we do this at the lowest cost possible?’” Lanyon said. He declined to provide a starting fee, saying negotiations generally begin with a low-basis-point formula.

William Trout, director of the securities and investments practice at Datos Insights, and Gregory O’Gara, a strategic adviser with the firm’s wealth management practice, described Interactive Brokers as a closer comparison for RQD than larger legacy custodians because of its technology and infrastructure.

Interactive Brokers has served advisers and other customers in this segment for about two decades and has greater scale, Trout and O’Gara said. RQD could compete through relationship-based service and dedicated support, while Interactive Brokers generally operates as a lower-touch platform, including in its adviser business.

The new capital will support RQD’s businesses. The investment announcement focused on the company’s work as an institutional clearing provider for global investment firms and financial technology platforms seeking access to U.S. markets. Lanyon said RQD’s growing operations in Asia, the Middle East and other parts of North America could provide additional resources for its U.S. wealth management clients.

During roughly the first eight months of the year, RQD processed more than 543 ledger transactions and 515 stock trades and cleared 64.8 million options contracts, according to the company.

“Financial institutions should not have to choose between the technology and agility of a fintech and the market-structure expertise, risk management and infrastructure of an institutional clearing firm,” CEO Michael Sanocki said in a statement. “We built RQD* to deliver both, and Bain Capital’s investment will help us accelerate that mission while continuing to deliver the flexibility and service our clients expect.”

RQD was founded in 2019 and launched in 2021 after receiving regulatory approvals. Sanocki previously worked as an attorney at the Securities and Exchange Commission and as in-house counsel at International Securities Exchange Holdings, an options exchange operator.

The company’s name refers to the abbreviation for “required,” reflecting its focus on providing financial infrastructure to advisers and other firms. Lanyon said RQD is seeking agreements with advisory firms that want alternatives to existing custody arrangements, provided the commercial terms work for both sides.