What Is Limited Trading Authorization?

Limited trade authorization is a level of discretionary trading authorization that gives an agent or broker the power to place orders or make inquiries concerning a client's account. Limited 澳洲幸运5官方开奖结果体彩网:trading authorization allows the a𝕴gent to act on behalf of an investor, but does not allow for the disbursemen𝓰t of account funds.

The signature characteristic of limited trade authorization is the discretionary authority to execute tr♊ade orders 🃏that is passed from a client to a registered investment advisor.

How Limited Trading Authorization Works

A step down from 澳洲幸运5官方开奖结果体彩网:full authorization, limited trading authorization allows a broker or agent to purchase and sell securities at his or her discretio🧜n. This is often 🅠used when a client does not know much about investing, and trusts the broker to properly manage his or her account. In circumstances where the client is a knowledgeable investor, limited authorization can allow the client to capitalize on broker recommendations.

By eliminating the need to seek approval for every transaction, brokers and financial advisors operating under limited trade authorization can quickly implement portfolio and asset management strategies. In a sense, by using a limited trade authorization agreement, responsibilities akin t🌳o a limited power of attorney are paꦬssed to another financial professional.

For most investment strategies that are not buy-and-hold in nature, it would be overly cumbersome and potentially costly to performance to seek a client's approval for every proposed transaction. Greater flexibility under a limited trade authorization arrangement gives money managers the freedom to allocate capital to its highest potential. Naturally, a broker or financial advisor managing asset under any trade authorization level must act in the client's best interest. Regulators and the asset management industry are increasingly taking fiduciary responsibility more seriously.

🧸A key feature of limited trade authorization is the inability to transfer assets fro𒀰m one financial institution to another. This can also include account types. Limited trade authorization does not include custodial authority, simply the ability to execute purchase and sale orders. This means a broker cannot transfer assets from say, Morgan Stanley to Merrill Lynch, without first seeking permissions under separate client authorization forms and approvals.