A broker who does not execute trades on behalf on the investor, but instead only takes care of the bookkeeping for the portfolio, margin provisions and short provisions, is called a
A)prime broker.
B)wholesale broker.
C)retail broker.
D)discount broker.

Question

Quizplus · Accepted Answer

A broker who provides services such as portfolio bookkeeping, margin provisions, and short provisions is called a prime broker. This type of broker typically works with hedge funds, institutions, and high net worth individuals who require more complex services than those provided by traditional retail or discount brokers. Prime brokers do not execute trades on behalf of the investor but may provide access to multiple execution platforms and custodial services. Wholesale brokers typically deal with large orders and may act as intermediaries between institutional investors and traders, while retail brokers cater to individual investors seeking to buy and sell securities. Discount brokers offer low-cost trading services and may be suitable for those who require basic trading capabilities. A broker who only takes care of bookkeeping, margin provisions, and short provisions is called a prime broker. This type of broker usually deals with institutional clients such as hedge funds, mutual funds, and pension funds, rather than individual retail investors. Wholesale brokers also deal with institutional clients but carry out transactions on their behalf, making them different from prime brokers. Retail brokers and discount brokers, on the other hand, are both focused on individual retail investors and execute trades on their behalf.

A Broker Who Does Not Execute Trades on Behalf on the Investor