Customer Accounts

Registered representatives (sometimes called stockbrokers or agents) are individuals associated with FINRA member broker-dealers who are licensed to solicit and accept securities orders, provide recommendations, and open and service customer accounts. To become registered, an individual must: (1) associate with a FINRA member firm, (2) pass the SIE, (3) pass a top-off exam (Series 7, Series 6, etc.), and (4) register with FINRA and applicable states. If a registered rep leaves a firm, their registrations become inactive until they join another firm. Market makers are broker-dealers that continuously quote both bid prices (prices at which they will buy) and ask prices (prices at which they will sell) for specific securities. They profit from the bid-ask spread and provide liquidity — ensuring buyers can always find sellers and vice versa. On the NYSE, specialists are called Designated Market Makers (DMMs); in OTC markets (like those operated by FINRA), market makers are called market makers. Clearing corporations ensure that trades settle properly. The DTCC (Depository Trust & Clearing Corporation) handles the vast majority of U.S. securities clearing and settlement through its subsidiaries: the NSCC (equities clearing), FICC (fixed income clearing), and DTC (the central securities depository). Securities transactions in the U.S. settle on a T+1 basis — one business day after the trade date. Transfer agents work for the issuing company — they maintain the official records of who owns what shares, process transfers of ownership, handle dividend distributions, and manage corporate actions like stock splits. They are distinct from custodians, who hold and safeguard securities on behalf of investors. Key Terms: - Broker (agent): Executes trades on behalf of customers; earns commissions; does not trade for its own account in this…