Discretionary Accounts

What this video covers

• What investment discretion actually means: the representative chooses the security, the action (buy or sell), or the quantity without the customer's prior approval for each trade
• Why the time-and-price exception is not full discretion, and how to identify when a scenario qualifies (customer names all three: security, action, quantity)
• The three mandatory conditions for a valid discretionary account: prior written authorization from the customer, written acceptance by the firm, and marking every order ticket as discretionary
• Why missing any one of the three authorization conditions makes the account unauthorized, even if two of three are present
• What churning is, why there is no fixed numeric trade-count threshold, and why the standard is relative to the account's financial resources, objectives, and character
• Why time-and-price discretion expires at the end of the business day it is granted, not until canceled or end of week
• The stricter supervision requirements for options discretionary accounts, including registered options principal (ROP) approval and review
• The split record-retention periods: six years for account-level documents (authorization and firm acceptance), three years for daily order approvals