Account Types & Registration

Cash Account

• Must pay in full by settlement date (T+1)
• No borrowing, no margin
• Reg T violation if payment not received = frozen account (90 days)

Margin Account

• Borrow from broker-dealer to buy securities
• Reg T: 50% initial margin requirement (set by Fed)
• Minimum maintenance: 25% (FINRA minimum for long positions)
• Short account maintenance: 30%
• Margin call if equity falls below maintenance requirement
• Margin agreement required: credit agreement, hypothecation agreement, loan consent (optional)
• Pattern Day Trader: 4+ day trades in 5 business days = requires $25,000 minimum equity

Joint Accounts

• JTWROS (Joint Tenants with Right of Survivorship)
• When one owner dies, assets pass to the survivor(s)
• Most common for spouses
• TIC (Tenants in Common)
• When one owner dies, their share goes to their ESTATE (not the other owner)
• Ownership can be unequal

Custodial Accounts (Minors)

• UGMA (Uniform Gift to Minors Act): Minor owns at age 18
• UTMA (Uniform Transfer to Minors Act): Minor owns at age 18 or 21 (state-dependent)
• Gift is IRREVOCABLE — once given, can't take it back
• Only ONE custodian and ONE minor per account
• No margin trading, no options, no speculative investments
• Custodian has fiduciary duty

Trust Accounts

• Managed by a trustee for beneficiaries
• Must follow terms of the trust document
• Trustee has fiduciary duty

Discretionary Accounts

• Rep can decide what, when, and how much to trade WITHOUT prior client approval per trade
• Requires WRITTEN authorization (power of attorney / trading authorization)
• Principal must approve discretionary accounts
• Each trade must be reviewed by principal promptly
• Time and price do NOT make an account discretionary
• If client says "buy 100 shares of Apple when you think the time is right" = NOT discretionary (only time/price discretion)