Accounts, Brokers and Execution
14 articles
The plumbing between a decision and a position: account types, margin, how an order is routed, what protection exists and what a statement is actually telling you.
Foundations
Start here if the subject is new.Account Types
The account a security is held in changes what can be done with it, how it is taxed and who has a claim on it. It is a structural decision, not an administrative one.
Cash and Margin Accounts
A margin account borrows against the securities in it. That changes settlement, enables short selling, and introduces a lender with the right to close positions.
Buying Power
The number a platform shows as available is a calculation with several inputs, and it is not the same as the money in the account.
SIPC, FDIC and What Is Actually Protected
Account protection covers the failure of the firm holding your assets. It has never covered the possibility that an investment loses money.
Checking a Broker Before Sending Money
Registration, disciplinary history and custody arrangements are all public and take a few minutes to check. Almost every large fraud fails at the first of them.
Reading a Brokerage Statement
A statement reconciles a period. The sections that get skipped are the ones that reveal costs, corporate actions and errors.
Transferring an Account
Moving positions between firms is a standardised process that preserves holdings and cost basis. Selling and rebuying is a different thing entirely.
Fractional Shares
A fraction of a share is a position held by the broker on your behalf. It behaves like a share in most respects and differs in several that matter.
Dividend Reinvestment
Automatic reinvestment buys more of the same security with each distribution. It compounds, and it makes every distribution a purchase with tax and record-keeping consequences.
Trade Confirmations
A confirmation is the legal record of a transaction and it carries disclosures that appear nowhere else, including how your broker acted and what it was paid.
Intermediate
Assumes the foundations above.Margin Mechanics and Margin Calls
Two separate requirements govern a margined position: what is needed to open it and what is needed to keep it. A call arrives when equity falls below the second.
Order Routing and Payment for Order Flow
An order does not go to an exchange because you sent it there. It goes wherever your broker routes it, and the routing decision has a disclosed economics behind it.
How Corporate Actions Reach Your Account
Splits, spin-offs, mergers and dividends are processed by the broker on dates set by the company. What arrives, and when, follows rules that are not always obvious.
Securities Lending
Shares held in a margin account can be lent to short sellers. The holder usually keeps the economics and loses some rights while the loan is outstanding.