When executing trades, firms can act in an agency or principal capacity—each with different roles, responsibilities, and compensation structures. This video explains how to distinguish the two, both in practice and on exam questions.

You’ll learn:

• What it means to act as an agent vs. a principal

• How firms earn compensation: commissions vs. markups/markdowns

• The disclosure requirements for each capacity

• How these roles impact client relationships and trade execution

• How to quickly identify agency and principal roles in exam scenarios

📘 Related Exams: SIE, Series 7, Series 9, Series 63, Series 65, Series 66
🧠 Skill Level: Beginner-to-intermediate
📈 Topics Covered: Trade execution, firm roles, commission vs. markup, customer disclosures, regulatory rules