A panel broker is a stockbroker who is pre-approved and listed by a specific organization to execute stock transactions, particularly buying and selling securities listed on a stock exchange. They are often associated with specific investment accounts, like an eWRAP Investment account.
In simpler terms:
Imagine you have an investment account through a certain company. That company may provide you with a list of approved brokers – these are your "panel brokers." These are the only brokers you can use to buy and sell stocks within that specific investment account. The company approves these brokers to ensure they meet certain standards and can reliably handle transactions for their clients.
Key Characteristics of a Panel Broker:
- Pre-Approved: They are vetted and approved by a specific institution (e.g., an investment platform or financial advisor).
- Limited Selection: Investors are restricted to using brokers on the panel.
- Security Focus: The panel ensures a certain level of security and reliability for transactions.
- Associated with Specific Accounts: Usually tied to particular investment accounts or programs.
Example:
Let's say you have an eWRAP Investment account. The company managing that account provides you with a list of five "panel brokers." You must choose one of those five brokers to execute any stock trades through your eWRAP account. You cannot use a broker who is not on the list.
Why Use a Panel Broker System?
Institutions use panel broker systems for several reasons:
- Oversight & Control: They maintain better oversight of trading activities.
- Compliance: They can ensure that brokers comply with relevant regulations.
- Risk Management: It helps manage risk associated with brokerage services.
- Standardized Processes: Creates standardized trading processes for all users.
