Trading, Accounts & Prohibited ActsQuestion 248 of 398
Before a registered representative may exercise discretion in a customer's account, what is generally required?
a.Prior written authorization from the customer and firm acceptance of the account as discretionary
b.Only a verbal okay from the customer for each trade
c.Approval from the transfer agent
d.A margin agreement, regardless of account type
Explanation
Discretionary trading requires prior written authorization (a signed trading authorization or power of attorney) and the firm's written acceptance of the account. Each discretionary order must also be identified as such and the account reviewed frequently to detect churning.
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