Account types, margin, KYC, suitability, recommendations, and customer account regulations.
40 cards · basic cards · AI-written, checked twice. Edit anything.
- What is a cash account?
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An account where securities purchases must be paid in full within the settlement period.- What is a margin account?
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An account that allows clients to borrow money from the broker to purchase securities.- What is a discretionary account?
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An account where the representative is authorized to make trading decisions without seeking prior approval on each transaction.- What is a custodial account?
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An account opened by an adult for a minor, managed by the custodian until the minor reaches the age of majority.- What is a trust account?
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An account established under a trust agreement where a trustee manages funds for the benefit of a beneficiary.- What is a joint account?
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An account with two or more owners who have equal rights to the account unless otherwise specified.- What does KYC stand for?
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Know Your Customer.- What is the primary purpose of the KYC process?
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To gather information about the customer's financial situation, investment experience, and investment objectives.- When must a customer's KYC information be updated?
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Annually or immediately if the customer reports a significant change in financial situation or investment objectives.- What does CIP stand for?
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Customer Identification Program.- What is the purpose of the Customer Identification Program?
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To verify customer identity and detect suspicious activity related to money laundering or terrorist financing.- What information must be collected during account opening?
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Name, address, date of birth, employment status, investment objectives, and risk tolerance.- What is suitability?
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A requirement that recommendations be appropriate for a customer based on their financial situation, needs, and investment objectives.- What factors must be considered when determining suitability?
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Financial situation, investment objectives, risk tolerance, time horizon, and investment experience.- How does suitability differ from best execution?
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Suitability concerns whether a recommendation is appropriate for the customer; best execution concerns obtaining the best price and terms.
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