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| ===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.
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| 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.
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| *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.
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| *If the manager has not disclosed the client′s identity to the dealer, as its agent the manager has two options. It can either:
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| **Disclose the [[principal]]′s identity (so the dealer can take it up with the principal directly), or
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| **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
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| is in fact performance of an agency role, but economically (from the dealer′s perspective) it is identical to a principal obligation.
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| {{Seealsoagent}} | | {{Seealsoagent}} |
| *{{tag|executing broker}} | | *{{tag|executing broker}} |