What is the primary function of an Introducing Broker?

• A. To manage all client accounts
• B. To have direct contact with the client
• C. To underwrite new securities issue
• D. To trade in the exempt market

Answer: (B)

The primary function of an Introducing Broker is to have direct contact with the client. This role involves actively engaging with clients to understand their needs and preferences, providing them with market insights, and facilitating transactions. Introducing Brokers act as intermediaries between clients and larger brokerage firms, often handling client inquiries, offering personalized support, and guiding clients through the trading process.

While managing accounts might sound like a part of their responsibilities, Introducing Brokers typically do not manage client accounts in the same capacity as a registered investment advisor or a portfolio manager would. They focus more on building relationships and ensuring that clients are informed and comfortable with their trading decisions. Other options, such as underwriting new securities or trading in the exempt market, fall outside the standard functions of an Introducing Broker, emphasizing their specific role in client interaction rather than in direct trading execution or capital-raising activities.