substantial position
proprietary account

This may affect how you view the commission rates being offered. You can choose from a variety of commissions to best suit your business goals, choose from RevShare, CPA, or hybrid. Ask your brokerage how flexible they are with these commission types, perhaps you’ll need a customized solution. Think about what your clients want in a brokerage and look for these qualities in a partner brokerage. An advanced trading platform and software will make trading more efficient and provide up-to-date information.


0.2, in the case of positions that are subject to daily mark-to-market margining but that are not cleared by a registered or exempt clearing agency or derivatives clearing organization. This term means a contract market (as defined in § 1.3), a swap execution facility (as defined in § 1.3), or a registered futures association under section 17 of the Act. This term means an instruction or authorization provided by a customer to a futures commission merchant, introducing broker or commodity trading advisor regarding trading in a commodity interest on behalf of the customer.

B. Lost and Stolen Securities Program (Rule 17f-

An introducing broker introduces the client to a clearing broker. The clearing broker handles the trade and manages the account. In contrast, an executing broker processes buy orders and sell orders. An introducing broker advises clients in the futures market but delegates trade execution and back office operations to others. Dealers are large financial institutions that sell securities to end users and then hedge their risk by partaking in the interdealer market. Interdealers facilitate price discovery and execution between dealers.

Before trading, please read the Risk Warning and Disclosure Statement. Introducing Brokermeans anybrokerage firm which introduces security transactions on behalf of the undersigned, which transactions are cleared through Apex, whether one or more. “Obligations” means all indebtedness, debit balances, liabilities or other obligation of any kind of the undersigned to Apex, whether now existing or hereafter arising. “Options” means all types of options, including puts, calls, equity, debt, index or otherwise. “Securities and other property” shall include, but shall not be limited to money, securities, commodities or other property of everykind and nature and all contracts and options relating thereto, whether for present or future delivery. Broker-dealers have an obligation to comply with the sanctions programs administered by the Department of Treasury’s Office of Foreign Assets Control .

This term includes sales, purchases, agreements of sale or purchase and agreements to sell or purchase. Settlement, netting, or novation of obligations resulting from a sale of a commodity in a transaction in the spot market for the commodity. Testimonials on this website may not be representative of the experience of other customers. No testimonial should be considered as a guarantee of future performance or success. Level 2 data is important for traders because it shows the full range of open orders for a stock, not just the current best bid and ask price. Using Level 2 data, you can identify potential trades before they become apparent on technical charts or get additional…

The commodity pool is formed and operated by a registered commodity pool operator or by a commodity pool operator who is exempt from registration as such pursuant to § 4.13 of this chapter. These terms mean a board of trade designated by the Commission as a contract market under the Act and in accordance with the provisions of part 38 of this chapter. Require broker-dealers to review the execution quality of their customer transactions at least quarterly (proposed Rule 1101). The operative words in the proposed best execution standard are identical to those in FINRA Rule 5310. Nevertheless, and as the SEC acknowledges, key aspects depart from the current best execution regulatory regime and will require significant industry adjustments.

G. Office of Foreign Assets Control

This thus prevents a broker-dealer from using customer funds to finance its business. The purpose of this rule is to require a broker-dealer to have at all times enough liquid assets to promptly satisfy the claims of customers if the broker-dealer goes out of business. Under this rule, broker-dealers must maintain minimum net capital levels based upon the type of securities activities they conduct and based on certain financial ratios. For example, broker-dealers that clear and carry customer accounts generally must maintain net capital equal to the greater of $250,000 or two percent of aggregate debit items. Broker-dealers that do not clear and carry customer accounts can operate with lower levels of net capital.

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There are a few exceptions to this general rule that we discuss below. In addition, we discuss the special registration requirements that apply to broker-dealers of government and municipal securities, including repurchase agreements, below. A person or business that provides investing advice or counsel to an investor, but does not actually handle transactions. Generally speaking, introducing brokers make recommendations while delegating the task of executing trades to someone at the same or a different firm who operates on a trading floor.

There have been differences in practice concerning the application of the exemption provisions. While the SEC FAQ guidance provides clarity on several issues including those outlined above, each broker-dealer has a unique set of circumstances, and the rules can be difficult to navigate. Management of introducing broker-dealers should revisit this guidance to assess whether year-end exemption reports are accurate and consider reaching out to its FINRA representative for additional clarity if necessary. For more information, reach out to your BKD Trusted Advisor™ or use the Contact Us form below. A person may, at its discretion, calculate the potential outward exposure of positions in swaps that are subject to daily mark-to-market margining in accordance with paragraph of this definition in lieu of calculating the potential outward exposure of such swap positions in accordance with paragraph of this definition. The person’s aggregate uncollateralized outward exposure for positions that are not reflected in any report of exposure from a swap dealer shall be calculated in accordance with paragraph of the definition in this section of substantial position.

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The exemption can’t be part of dual exemption as it is for broker-dealers whose activities are limited only to the direct-way mutual fund or variable annuity business. Although broker-dealers often provide investment advice to their clients, in many situations they are exempt from registration under the U.S. Investment Advisers Act of 1940, so long as the investment advice is “solely incidental” to brokerage activities; and the broker-dealer receives no “special compensation” for providing the investment advice. Both elements of this exemption must be met to rely on it. In addition to execution of securities transactions, broker-dealers are also the main sellers and distributors of mutual fund shares. When executing trade orders on behalf of a customer, the institution is said to be acting as a broker.

sro rules

In addition to Commission rules, analyst conduct is governed by SRO rules, such as NASD Rule 2711 and NYSE Rule 472. The SRO rules impose restrictions on analyst compensation, personal trading activities, and involvement in investment banking activities. The SRO rules also include disclosure requirements for research reports and public appearances. Rule 105 of Regulation M prevents manipulative short sales prior to pricing an offering by prohibiting the purchase of offering securities if a person sold short the security that is the subject of the offering during the Rule 105 restricted period.

The define introducing broker firm is responsible for the delivery of the security and reporting the data of the trade. Brokers and clearing firms work hand in hand together to carry out the complete trade sequence from the moment you click the buy and sell buttons. Brokers must utilize a clearing firm to enable their customers to execute trades and traders need a broker in order to place trades. Clearing firms then take on the financial risk of the trade settlement. In that vein, the clearing firm is financially responsible for the completion of the trade sequence. Brokers are the conduit which enables customers to access the stock markets and place trades.

An agreement, contract, or transaction that is willfully structured to evade any provision of Subtitle A of the Wall Street Transparency and Accountability Act of 2010, including any amendments made to the Commodity Exchange Act thereby , shall be deemed a swap for purposes of Subtitle A and the rules, regulations, and orders of the Commission promulgated thereunder. For futures and commodity option positions, this term means the debit balance which would be obtained by combining the margin balance of any person with the net profit or loss, if any, accruing on the open futures or commodity option positions of such person. The sum of the amount calculated under paragraph of this definition and the product of the total effective notional principal amount of the person’s swap positions in all major swap categories multiplied by 0.15 is less than $1 billion. Maintains a substantial position in outstanding swaps in any major swap category.

Arbitration Services

Meaning of “issuers of securities in a narrow-based security index” as used in the definition of “security-based swap” as applied to index credit default swaps. This term means a request from a futures commission merchant to a customer to post customer initial margin; or a request by a derivatives clearing organization to a clearing member to post clearing initial margin or variation margin. All money accruing to such 30.7 customers as the result of trading in foreign futures contracts or foreign options. If the world of investing fascinates you, and if you want to make money without executing direct trades, you may find success as an introducing broker .

Clearing firms are essential when borrowing shares for short sales. Exceptional clearing firms tend to carry more short inventory of stocks. It’s not unusual for traders to have their brokers contact several clearing firms to locate shortable shares for traders. While this is done electronically, it can still take time and much effort for hard to borrow stocks. Clearing firms are also responsible for ensuring the funding and delivery of securities between counterparties.

For example, FINRA members must use “reasonable diligence” to determine the best market for a security and buy or sell the security in that market, so that the price to the customer is as favorable as possible under prevailing market conditions. A broker-dealer that otherwise meets the requirements of the intrastate broker-dealer exemption would not cease to qualify for the intrastate broker-dealer exemption solely because it has a website that may be viewed by out-of-state persons, so long as the broker-dealer takes measures reasonably designed to ensure that its business remains exclusively intrastate. The definition of “dealer” does not include a “trader,” that is, a person who buys and sells securities for his or her own account, either individually or in a fiduciary capacity, but not as part of a regular business. Individuals who buy and sell securities for themselves generally are considered traders and not dealers.

The Securities Exchange Act of 1934 (“Exchange Act” or “Act”) governs the way in which the nation’s securities markets and its brokers and dealers operate. We have prepared this guide to summarize some of the significant provisions of the Act and its rules. You will find information about whether you need to register as a broker-dealer and how you can register, as well as the standards of conduct and the financial responsibility rules that broker-dealers must follow.

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These terms each mean any transaction or agreement in interstate commerce which is or is held out to be of the character of, or is commonly known to the trade as, an “option,” “privilege,” “indemnity,” “bid,” “offer,” “call,” “put,” “advance guaranty,” or “decline guaranty,” and which is subject to regulation under the Act and the regulations in this chapter. Any swap that is primarily based on instruments of indebtedness, including but not limited to any swap primarily based on one or more broad-based indices related to debt instruments or loans, and any swap that is an index credit default swap or total return swap on one or more indices of debt instruments. In all notices required by the Act or by the rules and regulations in this chapter to be given in terms of business days the rule for computing time shall be to exclude the day on which notice is given and include the day on which shall take place the act of which notice is given. Having end-to-end trade clearing in-house naturally provides more control for the broker. The brokerage has complete control in a vertically integrated fashion.

When placing your money with a broker, you need to make sure your broker is secure and can endure through good and bad times. Our strong capital position, conservative balance sheet and automated risk controls are designed to protect IBKR and our clients from large trading losses. Client markups by introducing brokers are limited to 15 times IBKR’s highest tiered rate plus external fees.

The introducing broker and the person who execute a transaction split the fees and commissions according to some agreed upon arrangement. The term most often applies to brokers in the futures market. An introducing broker is an individual or organization that solicits or accepts orders to buy or sell futures contracts, commodity options, retail off-exchange forex contracts, or swaps but does not accept money or other assets from customers to support these orders. The 1934 Act defines “broker” as “any person engaged in the business of effecting transactions in securities for the account of others”, and defines “dealer” as “any person engaged in the business of buying and selling securities for his own account, through a broker or otherwise”. Under either definition, the person must be performing these functions as a business; if conducting similar transactions on a private basis, they are considered a trader and subject to different requirements.

For additional information about rates on margin loans, please see Margin Loan Rates. Security futures involve a high degree of risk and are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading security futures, read the Security Futures Risk Disclosure Statement. Structured products and fixed income products such as bonds are complex products that are more risky and are not suitable for all investors.

If the cooperative is a cooperative association of producers, the swap is primarily based on a commodity that is not an excluded commodity. An issuer of securities that is a borrower with respect to any loan identified in an index of borrowers or loans. For purposes of the calculations set forth in paragraph of this definition, the person shall use the effective notional amount of a position rather than the stated notional amount of the position if the stated notional amount is leveraged or enhanced by the structure of the position. This term does not include any sale of a cash commodity for deferred shipment or delivery. A person predominantly engaged in activities that are in the business of banking or financial in nature, as defined in section 4 of the Bank Holding Company Act of 1956, 12 U.S.C. 1843.

Rather than rest on your laurels, ask your most satisfied customers to refer their friends and families to you. They may do this gladly, but also provide some incentives. The more clients you bring in, the more the brokerage will value your role as an IB, which will build on your mutual profitable partnership. You have signed the agreement with the brokerage, and it is time to look for clients.

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