I obtain the client’s permission before executing trades, but the brokerage firm will accept my instructions when trading on client accounts. Would I be considered to have discretionary authority?
An investment adviser will not be deemed to have discretionary authority over client accounts when it places trade orders with a broker-dealer pursuant to a third party trading agreement if all the following are met: (1) The investment adviser has executed a separate investment adviser contract exclusively with its client which acknowledges that the investment adviser must secure client permission prior to effecting securities transactions for the client in the client’s brokerage account(s), and (2) The investment adviser in fact does not exercise discretion with respect to the account, maintains a log (date and time) or other documents each time client permission is obtained for transaction, and (3) A third party trading agreement is executed between the client and a broker-dealer which specifically limits the investment adviser’s authority in the client’s broker-dealer account to the placement of trade orders and deduction of investment adviser fees.
Related Questions
- I obtain the client’s permission before executing trades, but the brokerage firm will accept my instructions when trading on client accounts. Would I be considered to have discretionary authority?
- With trading directed by an advisor, is the choice of a brokerage firm still important?
- Can a DP ask for RBI permission for executing instructions for purchase or sale?
