How to set up an account with a broker

Investing
August 13, 2018

Opening a brokerage account is as simple as opening a checking account, if you're prepared.

​Generally, you'll need to be at least 18 years old to open an account yourself, although some overseas online brokers may require you to be 21 years of age.

Filling out the form

You'll need to fill out a form with this standard information:

  • name
  • address
  • phone number
  • type of account
  • identification number from a driver's license or passport
  • tax number, and
  • your signature.

You may also need to to disclose the following:

  • employment information
  • annual income
  • net worth, and
  • investment objectives.

Main types of account registration:

  • ‍individual: this is a non-qualified brokerage account in the name of one person only
  • ‍sole proprietorship: this is a brokerage account established for a self-employed individual, or
  • ‍trust: this account specifies that the brokerage account that it establishes, is to serve the investment needs of the trust. Documentation of the trustee's capacity is needed, including a copy of the trust document.

Account types:

  • ‍cash: this account allows only for cash purchases of securities. No purchases on margin are permitted
  • ‍margin: is one in which the investor may purchase stock on margin, e.g., with borrowed money
  • ‍options: this type of account allows the individual to establish options positions separate from or in addition to securities positions. This means that the individual could use options to preserve capital or enhance returns, or simply trade the options like common shares to achieve similar exposure at a lower cost
  • ‍retirement: this is a brokerage account established within a retirement plan
  • ‍day trading: this account type allows for rapid trading in and out of securities positions on an intraday basis to capture gains. Transaction costs and the risks of trading in such accounts can be considerable and must be disclosed to the prospective client. This type of account must permit margin purchases and maintain a minimum balance
  • ‍prime brokerage: a complement of brokerage services provided to hedge funds, or
  • ‍discretionary: The broker has complete discretion over trades in the account.

Customer identification procedures

Brokers are required to establish, document and maintain a written policy for identifying you. These include your:

  • date of birth
  • next of kin, and their contact details, and
  • citizenship (residency status).

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