Riskless Principal
Categories: Bonds
If you’re rich enough and like investing, you can have a brokerage do the heavy-lifting of executing orders for you. If you want the order exactly as you ordered it—price and all—you can potentially set up your brokerage as a riskless principal for you.
A riskless principal is a party who buys or sells a security on behalf of another, but filling the order on their own account for timeliness. The broker says “You got it, boss!” and wastes no time executing the order for their customer, on their own account, to fulfill that order for the investor-customer. For instance, buying 20k shares of HubbaBubba stock at $5 a pop.
The Financial Industry Regulatory Authority (FINRA), a watchdog of Congress, likes to protect traders from sneaky brokerages. To make sure everything’s fair, FINRA says you can only be a riskless principal if the trade is executed at the order price, not counting commissions or any other dirty fees.
Basically: be transparent, and don’t be an a$$.
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once again for those in the back that's Financial Industry Regulatory
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every day well FINRA is the private agency that
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a looksie... think about all the bad PR that sleazy financial wheeler-dealers [Financial dealers discussing matters]
got back in the 1930s before the various acts were enacted you know the 33 34 40
nobody was gonna trust "Wall Street people" unless there was a kind
of Good Housekeeping Seal of fair-and-square dealers who made sure
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followed and that that letter is presented in a way so that everyone has
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