This topic separates cash accounts from margin accounts. A margin account requires a hypothecation agreement pledging the securities as collateral, is governed by Regulation T, and carries maintenance requirements a cash account does not — along with the risk of a margin call.
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Under the hypothecation agreement, the customer pledges (hypothecates) securities as collateral for the margin loan. The loan consent agreement, by contrast, permits the firm to lend the customer's securities to others.
Fee-based compensation is commonly based on assets or advisory services, while commission-based compensation is generally transaction-based.
Options accounts require firm review and approval based on relevant customer information and risk considerations before options trading is permitted.
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