The Jolly Contrarian

Agent: Difference between revisions

Page Discussion

Agent (view source)

Revision as of 09:55, 2 December 2022

1,007 bytes added ,  2 December 2022
no edit summary
No edit summary
 
(16 intermediate revisions by the same user not shown)
Line 1: Line 1:
{{a|contract|}}
''For the wonderful world of {{tag|MiFID}} categorisation, and for a convoluted answer to the question “who’s client”? see [[Client - COBS Provision]]''
A source of far more angst than you would expect amongst the professional classes. An agent is one fellow who represents ''another'' fellow.
===Don’t shoot the messenger===
When it comes to entering a {{tag|contract}}, an agent enters legal relations on behalf of {{sex|his}} {{tag|principal}} and, in general terms, tries not to take on any personal responsibility {{sex|himself}}. The contract remains between the principal and the third party.
But you soon encounter a thicket of confusion from which you may never emerge and which you will almost certainly regret ever entering. What if the agent doesn't tell the third party who the [[principal]] is? What if the agent doesn't even let on that she’s an agent?
===It takes three to tango===
The problem is that a contract, by well-trodden legal theory, depends upon the state of mind of two people, whereas where an agency exists, the necessary parts of that consensus can live variously between the minds of ''three''. A may have appointed B, without C knowing. B may have represented to C without A knowing. C and A might not know about each other at all.
In this way it resembles playing {{tag|cricket}} with a [[runner]]. Anyone who has ever done that will know the boundless possibilities for confusion and acrimony it presents.
===At least ''two''===
From time to time resourceful structurers might try to overcome an accounting problem, or a booking issue between two desks, by interposing an agency arrangement in the middle of a transaction which, otherwise, has the same entity at either end of it. Won’t work. It won’t work even if the agent is a third party — legally, it just vanishes — and it ''certainly'' won’t work if the agent is the same entity as the principal. ''[[Nemo agens in causa sua]]'', as the  [[JC]] likes to say.
===[[Capacity and authority]]===
An agent must, of course, be duly [[capacity and authority|authorised]] by the [[principal]], but how will the [[third party]] know this, without the [[principal]] being there to confirm it? You will hear much talk of [[ostensible authority]].
An agent has a special relationship with a {{tag|principal}}
===[[Broker dealer]]s===
===[[Broker dealer]]s===
An Intermediary acts as True Agent if, acting on Buyer’s behalf, it agrees the purchase of an Asset from Seller by Buyer.  
An Intermediary acts as True Agent if, acting on Buyer’s behalf, it agrees the purchase of an Asset from Seller by Buyer.  
Line 9: Line 31:


===Asset managers and [[unallocated trades]]===
===Asset managers and [[unallocated trades]]===
Asset managers will often proudly tell declare that at no time, in no circumstances, can they ever be personally liable for transactions they instruct on behalf of their clients. as a general proposition you can see what they're trying to say but it isn't quite that straightforward.
{{unallocatedtrades}}
 
{{Agent representations}}
Where the [[manager]] instructs the transaction first and allocates it to a given client later — which is usually how managers like to carry on — this puts a [[dealer]] in an invidious position in between times. For a [[dealer]] cannot reject a trade against the street once it has executed it.
*The dealer must carry out the transaction regardless of whether the manager allocates to its client. Therefore the [[dealer]] is exposed to market risk immediately. That market risk is for the manager′s client’s account.
*If the manager has not disclosed the client′s identity to the dealer, as its agent the manager has two options. It can either:
**Disclose the [[principal]]′s identity (so the dealer can take it up with the principal directly), or
**Perform the [[principal]]’s obligations to the dealer on the principal’s behalf, as a good agent should (whereupon the manager can settle up with its client later – this is not the dealer′s concern). This
is in fact performance of an agency role, but economically (from the dealer′s perspective) it is identical to a principal obligation.
 


{{Seealsoagent}}
{{Seealsoagent}}
*{{tag|executing broker}}
*{{tag|executing broker}}
{{ref}}
{{c|brokerage}}
Retrieved from "https://jollycontrarian.com/index.php?title=Special:MobileDiff/12134...69699"