A broker’s call is a demand by a broker for additional collateral to support a position that has become margined. The collateral may be in the form of cash or securities. A broker may make a call when the value of the collateral has fallen below a certain percentage of the value of the securities … Read more
A fee-based investment is an investment where the investor pays a fee to the broker in exchange for the broker’s services. The fee may be a flat fee or a percentage of the investment. The advantage of fee-based investing is that the investor knows exactly how much they are paying for the broker’s services. The … Read more
Principal orders are those that are placed by the broker on behalf of the client. In other words, the client instructs the broker to buy or sell a security at a certain price, and the broker then places the order with a market maker or another broker. Who are principal trading firms? A principal trading … Read more
A bucket shop is a brokerage firm that allows its clients to place orders directly with the firm, without routing the orders through an exchange. Bucket shops were common in the late 19th and early 20th centuries, when many securities were not listed on exchanges. Bucket shops typically charged higher commissions than exchange-based brokers, and … Read more
The best execution rule is a FINRA Rule that requires firms to seek to obtain the best possible price for their customers’ orders. When acting as a broker-dealer, firms must take reasonable steps to obtain the best market conditions for their customers’ orders. This means that firms must use reasonable diligence to ascertain the best … Read more
The term “selling away” refers to when a broker sells securities products that are not offered by their firm. This can be a violation of FINRA Rule 3230, which requires firms to supervise the activities of their registered representatives. Selling away can also be a form of fraud if the products are not properly registered … Read more
Front-running is a type of market manipulation that occurs when a trader buys or sells a security based on advance knowledge of an order that will soon be placed by another party. In other words, the trader “front-runs” the other party’s order by getting in ahead of it. Front-running is considered a form of market … Read more
An itemized statement is a list of items, usually financial items, that provides details about each item. The list may be created by an individual or a company, and it may be used for personal or business purposes. For example, an individual might create an itemized statement of expenses in order to keep track of … Read more
The American Code for Information Interchange (ASCII) is a character encoding standard for electronic communication. ASCII codes represent text in computers, telecommunications equipment, and other devices. Most modern character-encoding schemes are based on ASCII, although they support many additional characters. ASCII was developed from telegraph code and its first commercial use was as a seven-bit … Read more
A deck in finance refers to a group of securities that are being offered for sale by a broker. The broker will typically group together securities that are of similar type, such as stocks, bonds, or options, and offer them as a package to potential buyers. The buyer can then choose which securities they would … Read more
