Quick Answer
Account type describes the customer relationship the firm services, and registration identifies who legally holds the account. The two answer different questions, so one account carries both. An institutional customer includes specified financial institutions, registered investment advisers, and other persons with at least $50 million in total assets. Prime brokerage is an arrangement, not a third category.
How Do Account Type and Registration Differ?
Account records describe several separate attributes. Retail and institutional labels identify the customer category. Prime brokerage describes a clearing and settlement arrangement that can serve substantial retail and institutional customers. Registration identifies whose name legally holds the account.
| Label | What it identifies |
|---|---|
| Retail customer account | A retail customer relationship. |
| Institutional customer account | A customer category that includes specified financial institutions, registered investment advisers, and other persons with at least $50 million in total assets. |
| Prime brokerage customer account | A clearing and settlement arrangement for substantial retail or institutional customers. |
| Individual registration | An individual as the legal account holder. |
| Corporate registration | A corporation as the legal account holder. |
Exam Tip: Gotchas
- Prime brokerage is not a third customer category. It can serve substantial retail and institutional customers.
- Registration and customer category answer different questions. A corporate registration does not alone establish retail or institutional status.
What Should You Check on Exam Day?
- Separate the customer category, prime brokerage arrangement, and legal account holder.
- Treat prime brokerage as compatible with substantial retail or institutional customer status.
- Read the registration to find who legally holds the account, not who trades it.
- Do not assume a corporate registration means an institutional relationship.