Quick Answer
A carrying agreement governs a relationship in which one broker-dealer carries customer accounts for another broker-dealer. It identifies the respective responsibilities of the carrying and introducing firms. That allocation affects which firm performs relevant customer-account operational functions, but it does not remove either firm's assigned regulatory responsibilities.
After the firm's financial reporting and calculations, the remaining question is which firm performs customer-account operational functions when two broker-dealers work together.
The Carrying Relationship
- A carrying agreement governs an arrangement in which one broker-dealer carries customer accounts for another broker-dealer.
- The agreement identifies the respective responsibilities of the:
- Carrying firm
- Introducing firm
Why the Allocation Matters
- The allocation of carrying responsibilities affects which firm performs relevant customer-account operational functions.
- The agreement clarifies responsibilities between the firms.
| Agreement effect | What it does not do |
|---|---|
| Identifies each firm's respective responsibilities | Eliminate a firm's regulatory responsibilities assigned to it |
| Helps determine which firm performs relevant customer-account operational functions | Transfer away accountability merely because another firm performs a function |
Carrying agreement → allocation of responsibilities → identified firm performs relevant operational functions
Exam Tip: Gotchas
- A carrying agreement allocates responsibilities. It does not eliminate either firm's responsibility to meet the regulatory obligations assigned to it.