Welcome to Customer Agreements and Account Types: the unit covering the rules for how firms open, document, and manage customer accounts, from basic cash accounts through margin and options trading.
Exam Weight: Part of Communication with Customers and Prospects (20%, 12 questions)
What You'll Learn
In this unit, you'll cover:
- Required Product Disclosures: The Options Disclosure Document and municipal official statement, and when each is delivered
- Unlawful Representations: Why registration never equals approval under the USA
- Performance Guarantees Prohibition: The line between describing product features and making prohibited guarantees
- New Account Requirements: What the firm documents, who approves a new account, and the trusted-contact request
- Margin Accounts: The margin agreement, Regulation T and FINRA margin percentages, and the risk disclosure a customer must receive before trading on margin
- Options Accounts: ODD delivery, principal approval, the 15-day signed-agreement rule, and how an option's premium is valued
Why This Matters
How firms open and document customer accounts sits at the intersection of state law and customer protection. The Series 63 exam tests the state-law pieces: the prohibition on representing that registration means approval, the line between describing a product feature and guaranteeing performance, the trusted-contact and vulnerable-adult protections, and the documentation required to open cash, margin, and options accounts.
Let's start with the rule that registration never equals approval.