Syndicate
Types of Accounts; Cash Account
The procedures to open a brokerage account is identical to those one follows when opening a current account or a credit account; however, the requirements are different according to if it is a cash account or a margin account.
Cash Account
It is called cash account because all the operations are in cash money, this type of account is the most common account opened by the investors. To do this, one has to fill in several forms which number varies from agency to agency.
On the application form for opening an account one has to put your name, address, social security number, occupation, nationality and a financial or banking reference. According to the case, they could also ask for your marital status, name and the spouse’s occupation, the name of the company in which each of you work and family, the financial situation and investment objectives of both.
According to the agency and the type of investment that you pretend to make, you might have to sign an authorization contract (in case another person, apart from you, might make orders against the account); a clients contract whose virtue is to allow the chosen account executive to act in your name as an stock exchange agent, and a limited authorization for contracting (by which you authorize the account executive to negotiate in a prudent manner and in function of the availability of the account, but not to get rid of any of the securities and funds in it.)
The following types of accounts, due that they have specific characteristics, require also as complement to fill other kind of forms:
- Joint account with the rights of survival: it allows any of the holders to act independently.
- Normalization donation account for minors: it allows the transference of assets to a minor. There will be only one beneficiary for each of these accounts and the minor only receives automatically these assets when he is of age.
- Before opening an account of this type you should consider the maturity of the minor and the consequences that this donation can have in his future, as it is the possibility of obtaining a sponsorship, due that the academic authorities base their opinions on the financial situation of the minor.
- Fiduciary accounts, society accounts and individual business accounts: they all require additional documentation about the beneficiaries and of an authorization for contracting.
- Options and future accounts: they require of additional indicative documentation about the experience level of the investor and its economic capacity to withstand risks. These forms constitute a way of protecting the investor not to accept an inadequate level of risk.
- Accounts in name of the stock exchange agent: in it the securities acquired for another person are maintained in the name of the agent (street name). For this you require to fill in a form in which you authorize the agent to lend the securities. These forms are meant to protect both parts. Any change in the situation or in the specification of the client must be documented and ratified.