What is client facilitation trading?

Facilitation. The process of providing a market for a security. Normally, this refers to bids and offers made for large blocks of securities, such as those traded by institutions.

What is a brokerage client?

A brokerage account is an arrangement in which an investor deposits money with a licensed brokerage firm, which places trades on behalf of the customer. Although the brokerage executes the orders, the assets belong to the investors, who typically must claim as taxable income any capital gains incurred from the account.

What is the difference between riskless principal and agency?

What is the difference between agency and riskless principal? Agency: A broker acts as agent if, acting at a client’s request and on its behalf, it purchases an asset from the market, separately charging the client a commission. As against the client, a riskless principal acts on its own behalf and not for the market.

What are the principal types of transactions in brokerage activity?

what are the principal types of transactions in brokerage activity? Sales, leases and subleases, exchanges and options.

What is the difference between agency and traders?

When entering an equity order on your computer or through your broker, you are, on some occasions, trading with another person through an exchange. Principal trades involve a brokerage’s own inventory of securities, while agency trading involves trading with another investor, potentially at another brokerage.

What is the difference between a broker and a dealer?

Dealers. While a broker facilitates security trades on behalf of investors, a dealer facilitates trades on behalf of itself. The terms “principal” and “dealer” can be used interchangeably. So, when you hear about big financial firms trading in their house accounts, they are acting as dealers.

What is the difference between broker and client?

Client advisors work with a long-term perspective in mind and are creative to reach the clients’ objectives whereas brokers tend to go with the easiest, quickest path just to get a deal done and move on to the next. At Voit, our client advisors are fiduciaries to their clients.

What is a riskless transaction?

Riskless principal transaction means a transaction in which a dealer buys a security from any person and makes a simultaneous offsetting sale of such security to a qualified institutional buyer, including another dealer acting as riskless principal for a qualified institutional buyer.

What is the latest SFC guidance on client facilitation?

On 14 May 2019, the Securities and Futures Commission (SFC) issued further guidance identifying and reiterating the key standards of conduct and internal controls relating to client facilitation expected of licensed corporations (LCs).

How do you deal with client facilitation services?

segregate agency and client facilitation traders, where all communication should be recorded and monitored; make proper Managers-in-Chargeto clients and obtain their prior consent to ensure they are aware of the inherent conflicts of interest of client facilitation services; and

Is a house or client facilitation trade an agency trade?

The inspections found that some traders misrepresented a house or client facilitation trade as an agency trade, or in some cases were not adequately transparent about whether facilitation would be involved in a trade.

Why is client facilitation compliance so important for LCS?

Ensuring compliance with the SFC’s expected standards in relation to client facilitation, especially the key ones identified in the 14 May 2019 circular, is of utmost importance as it helps to protect clients who rely on LCs to act in their best interests and to maintain market integrity and confidence.