What are the primary responsibilities associated with a carrying broker arrangement?

• A. Advising clients only
• B. Providing back office and execution services
• C. Managing client accounts without compliance
• D. Selling investment products directly

Answer: (B)

The primary responsibilities associated with a carrying broker arrangement primarily involve providing back office and execution services. This arrangement means that the carrying broker takes on critical functions such as clearing and settling transactions on behalf of other broker-dealers. They handle the administrative tasks necessary to support trading activities, which includes processing trades, managing client cash and securities, and typically maintaining custody of client assets.

This arrangement allows introducing brokers or other financial professionals to focus on client relationships and providing advice while relying on the carrying broker to manage the operational aspects of trading. By taking on these responsibilities, the carrying broker ensures that transactions are conducted smoothly and efficiently, thereby enhancing overall service quality for clients.

In contrast, the other options do not align with the core functions of a carrying broker. Advising clients only does not encompass the operational and logistical support that a carrying broker provides. Managing client accounts without compliance contradicts the regulatory framework that mandates adherence to compliance standards in the handling of client accounts. Selling investment products directly is also outside the scope of a carrying broker's primary responsibilities, as their focus is on support and execution rather than direct client sales.