Series 6: 2.2.8.4. Discretionary Accounts

2.2.8.4. Discretionary Accounts

A discretionary account is one in which the customer authorizes her registered representative to place trades in her account without seeking permission prior to each individual order. Without discretionary authority, a broker must receive the following three pieces of information from the customer before it can make a transaction in the customer’s account. These can be remembered by the acronym AAA.

1. Asset: The name of the security

2. Action: Whether to buy or sell the security

3. Amount: The amount of the security to be transacted

This so-called time and price discretion can be granted verbally; however, it is only good for the trading day on which it is given. If a customer wants to grant his broker-dealer or registered representative trading authority beyond this one-day period, he can only do so via sig