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© J. W. Korth & Company, 2005.
All Right Reserved
Shop4Bonds SM is a Service Mark
of J. W. Korth & Company
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"With more market centers than ever before, the duty of best execution must be woven more fully into the fabric of our markets. It must be at the very core of our promise of integrity to investors - a promise that brokers will act in their customers' best interest when they route and execute orders. It must reinforce competition, rewarding those markets that improve their execution quality, and punishing those that don't."
- Chairman Arthur Levitt (U.S. Securities & Exchange Commission)*
Why Trade Away From Your Current Custodian?
In today's domestic and world markets, evolutionary characteristics continue to press the boundaries of the trading process, especially the dynamic factors surrounding best execution. With oversight increasing and the definition of trade execution quality becoming more transparent, it becomes incumbent on the investment advisor to seek more competitive sources to ensure that the client receives the execution they deserve.
DIRECTED TRADES
Directed Trades take place when you are shown an offering from a broker/dealer other than your current custodian and you would like your current custodian to execute the trade with that contra broker/dealer for a specific client account under your management. Directed Trades can only occur in bond market transactions.
HOW TO PLACE A DIRECTED TRADE
To place a directed trade for your client's account, simply telephone or fax your current custodian's institutional trade desk with the following information:
- Your client's account number and your firm's institution identification number
- Name of contra broker/dealer (J. W. Korth & Company, L. P. and rep contact info)
- Information on the security
- Par value
- Coupon
- Maturity
- Yield Level
- Price
- CUSIP number
TRADEAWAY
As an active investment advisor, sometimes you need access to special securities (such as new bond issues not available through your current financial custodian) or perhaps you need access to proprietary research from other broker/dealers. TradeAway is an important supplement to your current trading practice that will allow you to take advantage of resources throughout the financial community, while continuing to enjoy the benefits of custodying your assets at your current financial custodian.
WHAT IS A TRADEAWAY?
Specifically, a TradeAway is a trading procedure that gives you the opportunity to execute equity and/or fixed income trades at another broker/dealer and have the trades settle at your current financial custodian. Simply trade in individual sub-accounts at a broker/dealer of your choice (after opening a delivery vs. payment accounts [DVP] with identical registrations), and settle the order seamlessly back at your current financial custodian. TradesAway are displayed as a single entry in both advisor and client reporting, and advisors have the ability to self-affirm orders. The executing broker is responsible for sending a trade confirmation to your client.
KEY FEATURES TO TRADEAWAY
- The following types of securities may be executed away to J. W. Korth & Company L. P. from your current financial custodian:
- Corporate bonds
- Municipal bonds
- Government issues
- Certificates of deposit
- Unit investment trusts
- Trade Away transactions can settle one of three ways:
- DTC ID system
- Federal Book Entry System
- Physical instructions
- No pre-approval of the executing broker/dealer is required to facilitate a Trade Away
- There is no minimum equity requirement for accounts traded through Trade Away
- No block trades allowed since all Trade Away trades must be placed at the sub-account level
HOW TO TRADEAWAY FROM YOUR CURRENT CUSTODIAN
Contact your current custodian's trade desk for any proprietary TradeAway forms that they may require. You will need the following information in addition to the security description:
Executing Broker/Dealer: J. W. Korth & Company, L. P.
Clearing Agent DTC Number: # 0158
J. W. Korth & Company, L. P. Rep Name and Phone Number
PRIMEBROKER
Prime Broker is a trading service that allows you to place block trades for fixed income products at another broker/dealer (executing broker) for accounts at your current financial custodian and to settle those trades with your current custodian. An appeal of using Prime Broker is that this trading service helps to eliminate the need to have accounts domiciled at multiple custodians.
HOW TO SET UP PRIMEBROKER TRADING FOR YOUR FIRM
- Initiate your firm's approval to conduct Prime Broker trades with your current financial custodian's institutional sales department
- Upon your firm's approval to conduct Prime Broker trades, you will need to contact your custodian's Prime Broker trading desk to establish your Prime Broker account at J. W. Korth & Company, L. P.
- Have each individual client account approved at your current custodian
Note: Some financial custodians may have certain eligibility conditions or minimums with
Prime Broker trades
HOW TO PLACE A PRIMEBROKER TRADE
- Place a block trade through your financial custodian to J. W. Korth & Company, L. P.
- J. W. Korth & Company, L. P. will issue a confirm back to your custodian which will verify the trade through your firm's identification number
- Submit your trade allocations to your financial custodian to disseminate the trades into your client's individual accounts
- Your financial custodian will then issue trade confirmations to you and your client's accounts
Please Note: There may be fees associated with Directed Trades, TradeAway, and/or PrimeBroker from your current financial custodian
J. W. Korth & Company, L. P. clears through ADP Clearing
Executing Broker/Dealer: J. W. Korth & Company, L. P.
Clearing Agent DTC Number: # 0158
ADP Clearing, Inc.
55 Waters Street
32nd Floor
New York, N.Y 10041
* Levitt, Arthur. "Speech by SEC Chairman: Best Execution: Promise of Integrity, Guardian of Competition." Securities Industry Association. Boca Raton, Florida. 4 November 1999.
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