Introduction to Trade Away service

Introduction to Trade Away service

The Middle Office Trade Away Services desk, supporting Trade Away and Prime Broker services, allows you to trade at other firms while continuing to custody assets at Schwab. With Trade Away, you can execute trades in individual accounts at another broker-dealer using a delivery versus payment Tooltip (DVP) account and settle the trades at Schwab with no minimum net equity requirements. Trade Away paperwork is required from all advisors.

  • No minimum net worth requirement
  • No paperwork for the client
  • No pre-approval for the executing broker-dealer
  • Ability to track and manage Trade Away transactions on the Schwab Advisor Center® Status Hub.
  • Trades are executed at the individual account level.
  • Trade Away fee is $25 per trade, per account.
  • Trades are booked in the client account on trade date when both the advisor instructions and DTC confirmations are received and matched.
  • The client account registration information at the executing broker-dealer needs to be for benefit of (FBO) client name, client tax ID, and client address exactly as it appears on their Schwab account.
  • The Middle Office Trade Away Services desk handles settlement of Trade Away trades.
Eligible securities
  • Equities
  • Corporate bonds
  • Municipal bonds
  • Government issues
  • Unit investment trusts
  • Certificates of deposit
Ineligible transactions and securities
  • Block trades
  • Short sales
  • Options
  • Open-end mutual funds
  • TBAs (To-be-announced securities)
  • Private placements
  • Foreign trades settling in local markets (including Euroclear) 
  • Certain restricted securities (subject to Schwab approval)

Schwab reserves the right to reject any trade that does not follow the required procedures.

Settlement Settlement method is determined by the executing broker. Trade Away transactions are settled in the client’s Schwab account one of two ways:
Management The executing broker notifies Schwab of Trade Away trades via electronic DTC confirmation. You can notify Schwab of your trades through Schwab Advisor Center or DTC.
  • Schwab Advisor Center—Schwab will automatically be notified of Trade Away trades as soon as the DTC confirmation is generated by the executing broker. You can track and manage Trade Away activity on the Schwab Advisor Center Status Hub. Trades can be managed at any time of the day.
  • DTC—Confirm your Trade Away trades automatically via DTC, if you have access, but view trades and statuses on the Schwab Advisor Center Status Hub. Schwab encourages you to affirm your trades through DTC. Please contact the Middle Office Trade Away Services desk for more information and for the standard letter of agreement you will need to complete.  
Policies A completed addendum to the Service Agreement is required before any Trade Away trade can be executed.
  • List the Trade Away executing broker in a DVP account with the same registration as the Schwab account.
  • All DVP accounts opened at other broker-dealers with Schwab as custodian must be opened in the name of Charles Schwab FBO the client’s name, clients tax ID, and clients address.
  • The Middle Office Trade Away Services desk must receive notification of the Trade Away trade on the actual trade date and in the format designated by Schwab.
  • Do not fax Trade Away trades to Schwab.
  • Certain restricted securities are reviewed on a case-by-case basis and require prior approval before trading occurs.
  • Notify Schwab prior to placing a foreign security or cash settlement trade.
  • Schwab will not take principal risk for trades it did not execute.
  • Schwab reserves the right to reject any trade not complying with its procedures and policies. 

To compare the different features between Prime Broker and Trade Away Services, see the Prime broker vs. Trade Away comparison chart.

How do I open a DVP account at another firm?
Contact your executing broker-dealer to find out how to open a DVP account with that firm. DVP accounts at other broker-dealers must be opened with Schwab as the custodian and have the client’s name, client tax ID, and client address.

What is the difference between the Prime Broker and Trade Away services?
Prime Broker allows you to execute block trades at another broker-dealer and settle the trades at Schwab. You must meet certain requirements and be approved by Schwab. Trade Away allows you to execute trades at the individual account level at another broker-dealer in a DVP account where Schwab remains the custodian. The Middle Office Trade Away Services desk facilitates settlement of these trades. No minimum net worth is required to use this service.

How do I place a Trade Away trade?
Place your Trade Away trades at the executing broker-dealer in a DVP account with the client name, client tax ID, and client address. Follow the trading procedures you use with the executing broker-dealer.

Why would I use the Middle Office Trade Away service?
Trade Away enables your clients to access special securities, such as new issues not available through Schwab, or to receive proprietary research from other broker-dealers while still enjoying the benefits of Schwab being their custodian.

How to track and manage Trade Away trades
How to trade equities, mutual funds, and options through the Web Trading platform
Introduction to Prime Broker transactions
Introduction to the Status Hub
Introduction to the Web Trading platform

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

For more information, contact the Middle Office Trade Away Services desk at 800-404-6996.