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Omnibus Account

Definition

An Omnibus Customer Securities Account is a securities account used by a brokerage firm or its affiliated clearing firm in order to maintain appropriate custody of underlying securities for the purpose of satisfying the custody obligations of the broker-dealer towards its customers.

What is an 'Omnibus Account'

An omnibus account is an account between two futures merchants (brokers). It involves the transaction of individual accounts that are combined in this type of account, allowing for easier management by the futures merchant. This protects the identities of the individual account holders, because the futures merchant transacts for them.

Explaining 'Omnibus Account'

The term "omnibus" refers to an entity that holds more than one item. A minimum of two persons are required to create an omnibus account. All transactions occurring within an omnibus account appear under the name of the associated broker, leaving the details of individual investors private even from the holding merchant.

Omnibus Account Management

An omnibus account is normally overseen by a futures manager. The futures manager uses the funds in the account to complete trades on behalf of the participating individual investors. This method is similar to a street account in which the investor leaves stock in the broker's name, allowing the broker to hold the majority of the responsibility while also allowing them to take fast actions when required.

Primary Benefit of Omnibus Accounts

Omnibus accounts allow more efficient transactions to take place. Since the futures manager can initiate actions in their name, certain steps that occur during a normal trade can be eliminated. Often, the manager's compensation is tied directly to the performance of the omnibus account, adding incentive to have it perform at its best.

Omnibus Accounts and Foreign Markets

If a country accepts an omnibus account from another, it becomes the host market. Depending on the host country involved, regulatory concerns may arise. Since the individual investors participating in the account cannot be known, there is no way to determine the intents of the investors involved.


Further Reading


Towards a Global Financial Register? The Case for End Investor Transparency in Central Securities Depositories
academic.oup.com [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Omnibus accounts to Finnish investors?–An analysis of the costs and benefits that omnibus account structure brings to Finnish account operators and investorsOmnibus accounts to Finnish investors?–An analysis of the costs and benefits that omnibus account structure brings to Finnish account operators and investors
lutpub.lut.fi [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Legal certainty and financial markets integration: The MILA caseLegal certainty and financial markets integration: The MILA case
heinonline.org [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Economic interests and voting on the omnibus trade bill of 1987Economic interests and voting on the omnibus trade bill of 1987
link.springer.com [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Some problems of public utility regulation by a statutory board in Jamaica: The Jamaica Omnibus Services CaseSome problems of public utility regulation by a statutory board in Jamaica: The Jamaica Omnibus Services Case
www.jstor.org [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Bank Mergers after the Omnibus Banking Bill: Is Philadelphia National Bank Finally DeadBank Mergers after the Omnibus Banking Bill: Is Philadelphia National Bank Finally Dead
heinonline.org [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Financial globalization and debt maturity in emerging economiesFinancial globalization and debt maturity in emerging economies
www.sciencedirect.com [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …

Economic issues under the omnibus trade and competitiveness act of 1988: an overviewEconomic issues under the omnibus trade and competitiveness act of 1988: an overview
heinonline.org [PDF]
… Globalized finance is characterized by a disconnect between the issuers of securities, ie enterprises that need capital for their business projects, and investors 11 who take on the economic risk of those … III. ACCOUNT SEGREGATION VERSUS OMNIBUS ACCOUNTS …



Q&A About Omnibus Account


Where can you find information on how to set up an account like this one?

You can find information on setting up an account like this one at a bank or financial institution.

What are these accounts called?

These accounts are called "Omnibus Accounts".

What is a street account?

A street account is similar to an omnibus in which the investor leaves stock in the broker's name, allowing the broker to hold most of the responsibility while also allowing them to take fast actions when required.

What is an omnibus account?

An omnibus account is an account between two futures merchants (brokers).

How does this method protect identities of individual investors?

The futures merchant transacts for them.

How does this method allow more efficient transactions to take place?

Since a futures manager can initiate actions in their name, certain steps that occur during a normal trade can be eliminated. Often, compensation of a futures manager is tied directly to performance of an omnibus account adding incentive for it perform at its best.

What does the word "Omnibus" mean?

The word Omnibus means "for all".

What are the individual accounts that make up the omnibus account?

Individual accounts.

How many accounts are covered in this article?

There are two accounts covered in this article.

Who would be interested in reading about these types of accounts?

People who have money to invest and want to learn more about investing would be interested in reading about these types of accounts.

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