Introduction

Welcome to Account Types and Registration: the foundation for understanding how customer accounts are structured, opened, and maintained at broker-dealers.

Exam Weight: Part of 9% (~11 questions across Function 2)

What You'll Learn

In this unit, you'll cover:

• Types of Accounts: Cash accounts, pattern day trading accounts, prime brokerage, Delivery Versus Payment/Receive Versus Payment (DVP/RVP), and fee-based vs. commission-based accounts
• Account Registration Types: Individual, joint (Joint Tenants with Right of Survivorship, Tenants in Common, Tenancy by the Entirety, community property), sole proprietorship, partnership, corporate, and unincorporated association accounts
• Requirements for Opening Accounts: FINRA Rule 4512, new account form essentials, trusted contact persons, and authorization rules for negotiable instruments
• Day-Trading Account Approval and Disclosure: FINRA Rules 2130 and 2270 for firms that promote day-trading strategies
• Wealth Events: Inheritance, step-up in basis, and Transfer on Death (TOD) designations
• Account Changes and Transfers: FINRA Rule 4515 for name/designation changes, Automated Customer Account Transfer (ACAT) transfers, and re-registration requirements

Why This Matters

Every securities transaction starts with an account. The Series 7 exam tests your ability to match customers to the right account type, know who must sign what at account opening, and understand what happens to account assets when life events occur. These rules protect customers and define your responsibilities as a registered representative.

Let's start with the different types of brokerage accounts and when each is appropriate.