What is a broker's "Client Agreement"?

Unfortunately, most of us have become accustomed to automatically agreeing to any regulatory documents when registering on a website, simply by checking a box in the right place.

 

Almost no one reads the registration conditions or additional documents that regulate the company's activities.  

However, it would still be useful to have an idea of ​​the document on the basis of which your trading on the exchange will be carried out.

One of these important documents is the “Client Agreement”, which is present in every brokerage company.

You can find this agreement either during the registration process or in the "Documents" or "Agreements" section on the website of the selected broker:

What does this agreement represent and is it really necessary to read it?

A client agreement is a legal document that regulates the relationship between the client (trader) and the company (broker). It outlines all the key aspects of the partnership and the liability for failure to comply with obligations.

Typically, 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 agreement – ​​how long the client agreement is concluded for and the conditions for its termination or extension.

Services Provided – Discloses information about the services provided and describes the responsibilities and rights of the client and broker.

Defaults are instances that are considered a client default. One of the most important reasons a broker can forcibly close trades or even debit funds from a client's account:

Law and dispute resolution – how all disputes between a trader and a broker will be resolved. Also, in what cases can claims be rejected?

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 that do not directly relate to exchange transactions.

It's safe to say that a document such as the "Client Agreement" is mandatory reading. Knowing the terms of cooperation with a broker will help you avoid violating your obligations and, consequently, avoid penalties for such actions.