Introduction to Prime Broker transactions 

Introduction to Prime Broker transactions

The Middle Office Trade Away Services desk allows you to trade at other firms while continuing to custody assets at Schwab. With Prime Broker transactions, you can place block trades at other brokerage firms for accounts custodied at Schwab and then settle the trades at Schwab. You can also allocate a trade to multiple client accounts using the Web Trading platform and other means.

  • Simplify clients' account administration with centralized custody of assets at Schwab.
  • Transmit Prime Broker trade allocations electronically to the Schwab Advisor Services™ Web Trading platform.
  • Avoid customer confusion with combined statements and trade notifications.
  • Manage soft dollar commitments with the ability to trade away using Prime Broker transactions.
  • Meet Prime Broker requirements and be approved by Schwab.
  • To enroll in Prime Broker, contact your sales team. The approval process takes about two weeks.  
Eligible Securities
  • Equities
  • Bonds (corporate, agency, and federal)
  • Certificates of deposit
  • Unit investment trusts settled through the Depository Trust Company (DTC)
  • Commercial paper
Ineligible Securities
  • Options
  • Mutual funds
  • TBAs (To-be-announced securities)
  • Foreign trades settling in local markets (including Euroclear)
  • Restricted securities without prior approval before trading occurs

Upon requesting enrollment, the sales team will initiate Prime Broker approval with Charles Schwab and the Middle Office Trade Away Services desk.

  • Schwab begins collecting Prime Broker documentation.
  • Schwab is required to review eligibility of each executing broker. Contact the Prime Broker enrollments team to ensure the broker has been approved.
  • Schwab opens Prime Broker delivery versus payment Tooltip (DVP) accounts with executing brokers and obtains trading approval from clearing brokers.
  • Schwab provides executing brokers, through Omgeo ALERT, a list of subaccounts participating in Prime Broker, including the account holder name and taxpayer identification number. 
  • You can set alert preferences to receive email notifications from Schwab about your Prime Broker account and trade status. 

The Middle Office Trade Away Services desk will notify you of final approval. Then, Prime Broker trading can occur.

  • Clients are charged $25 per Prime Broker trade per account allocation. For more information on Prime Broker fees, talk to your sales team.
  • You execute a trade through an approved broker-dealer.
  • You provide electronic notification of block trades to the Middle Office Trade Away Services desk. Trade allocations for client accounts must be sent within two hours after market close.
  • Executing broker-dealer issues a DTC confirmation to Schwab. Prime Broker trades will not be processed until this confirmation is received. The Middle Office Trade Away Services desk books trades directly to the master and client accounts at Schwab at the same time trade notifications are issued to clients and after all necessary trade details are received from all parties.
  • Schwab handles trade settlement with the executing broker after it affirms the execution of each trade through the DTC Institutional Delivery system.
  • Schwab will send Prime Broker alerts notifying you of trade status if you set preferences on Schwab Advisor Center® to receive email alerts.
  • To review a comparison of the different features between Prime Broker and Trade Away Services, see the Prime Broker vs. Trade Away comparison chart.

What is the fee for executing trades away from Schwab via Prime Broker?
The fee for Prime Broker is $25 per trade, per client account.

Why would I want to trade at other firms?
Trading at other firms may provide you with:

  • Access to initial public offerings
  • Soft dollar arrangements
  • Flexibility of pricing, inventory, and available products
  • Centralized custody
  • Access to proprietary research and reports available from other broker-dealers

What if I want to terminate some, but not all, of my executing brokerage relationships?
You must instruct the Enrollments desk of Middle Office Trade Away Services in writing to terminate your relationship with the specified executing brokers. This can be a simple letter faxed to 877-255-2030.

Is there any assurance from executing brokers that they will not use the account information for marketing, solicitation, or business development?
Contact the executing brokers if you have concerns about the use of information. Schwab is unconditionally required to provide the account information to the executing brokers if clients have signed off on the Prime Broker paperwork and maintain at least $100,000 ($500,000 for clients of non-registered advisors) in their account.

Do Prime Broker or Trade Away fee adjustments affect a client's cost basis and tax reporting?
Yes. Any fee adjustments made will affect clients' cost basis and will be reflected on their 1099s.

How to track and manage Trade Away trades
How to trade equities, mutual funds, and options through the Web Trading platform
How to work with alerts
Introduction to Trade Away service
Introduction to the Web Trading platform

For more information about federal regulations for Prime Broker trades and restricted securities under Regulation S, visit the SEC website.

Read about the differences and risks of extended-hours trading.

For more information on Schwab's Trade Away services, contact the Middle Office Trade Away Services desk at 800-404-6996.