An Omnibus Account is an account used by an introducing broker dealer to execute and clear all of their customers’ trades through one account at the clearing broker dealer. This type of clearing arrangement is the exception to traditional fully disclosed clearing arrangements.
Applying "Omnibus Account" to Securities Exams:
When an introducing broker dealer operates its business on an omnibus basis, all trades are executed by the introducing broker and the clearing broker carries all of the cash and securities for the introducing broker and its customer in one omnibus account. The introducing broker must send confirmations and statements to the customers and no margin transactions are allowed. Unlike introducing broker dealers who conduct business on a fully disclosed basis the clearing member does not know who the trades are executed for or who the customers are. In practice an omnibus arrangement is the exception, most clearing arrangements are done on a fully disclosed basis. Mastering the information relating to introducing and clearing broker dealers will be key to passing your exam. See if your are ready to pass your exam with our exam prep software and our greenlight exam pass guarantee.