Carrying Agreements

What this video covers

• Why a carrying agreement must be written and submitted to the Financial Industry Regulatory Authority (FINRA) in advance, and why starting to use it before FINRA review is a hard violation
• The difference between fully disclosed clearing (customer's name on the account at the carrying firm) and omnibus clearing (introducing firm's name on a single account), including where each structure is typically used
• How functions like account opening, margin compliance, recordkeeping, confirmations, order acceptance, and execution can be allocated between the two firms
• Why safeguarding of funds and securities must be allocated to the carrying firm and cannot be flipped to the introducing firm, and the customer-protection possession-or-control logic behind that rule
• When the customer disclosure document must be delivered (at account opening) and the specific triggers for a subsequent notice (change of parties or material change of allocation), with no annual reaffirmation requirement
• The due diligence the carrying firm must perform on the introducing firm and the 10 business day advance notice to FINRA before onboarding a new introducing firm's accounts
• Why the 10 business day notice is a hard operational gate that cannot be bypassed or accelerated, even if the agreement itself has already been accepted