What is a “Client Agreement” from a stock broker?
Unfortunately, most of us are already accustomed to automatically agreeing to any regulatory documents when registering on a website, simply by checking the checkbox in the right place.
Almost no one reads the conditions of registration or additional documents that govern the company's activities.
But still, it will not be superfluous to have an idea of this or that document on the basis of which your trading on the stock exchange will be carried out.
One of these important documents is the “Client Agreement”; it is present in every brokerage company.
What is this agreement and is it really necessary to get acquainted with it?
A client agreement is a legal document that governs the relationship between the client (trader) and the company (broker). It is there that the main points of cooperation and responsibility for non-compliance with obligations are spelled out.
As a rule, such documents contain the following sections:
Terms and definitions – describes the definition of various terms and concepts that will be used in the agreement.
Duration of the contract - for how long the client agreement is concluded and the conditions for its termination or extension.
Services provided – information about the services provided is disclosed and the responsibilities and rights of the client and broker are described.
Failure to fulfill obligations - cases that are recognized as failure to fulfill obligations on the part of the client. One of the most important points, on the basis of which a broker can forcefully close transactions or even debit money from the client’s account:
Law and dispute resolution – how all controversial issues between a trader and a broker will be resolved. And also in what case it is possible to receive a refusal to satisfy claims.
Other provisions - everything that is not included in other clauses of the agreement, as a rule, these are additional rights of the company in relation to the client.
The client agreement regulates general issues of cooperation between the client and the company not directly related to exchange transactions.
We can say that a document such as the “Client Agreement” is a must-read; knowing the terms of cooperation with a broker will allow you to prevent violation of your obligations. And as a result, avoid punishment for such actions.