Agency Cross Transactions
The adviser brokers a trade between an advisory client and another party.
What is Agency Cross Transactions?
Permitted if the client has given prior written consent after full disclosure, receives a confirmation stating the adviser's capacity and compensation, and receives at least an annual statement of these transactions. The client may revoke consent at any time. The adviser cannot have recommended the transaction to both the buyer and the seller.
Agency Cross Transactions: a worked example
An adviser's affiliated broker matches a client's sell order with another customer's buy order, earning commission on both sides.
More terms in Ethics & Fiduciary Obligations
Form ADV Part 2 Brochure Delivery
Deliver 48 hours before the contract, or at signing with a 5-business-day exit.
Advisory Contract Requirements
Written, specific about fees, no assignment without consent, no waiver of rights.
Assignment of an Advisory Contract
Transferring a client contract requires the client's consent - including by change of control.
Performance-Based Fees & Qualified Clients
Allowed only for qualified clients: $1.4M with the adviser or $2.7M net worth (from June 29, 2026).
Prepaid Fees & Financial Requirements
Prepayment over $500, six months ahead, triggers net worth and balance sheet rules.
Custody
Holding, or having authority to obtain, client funds or securities.
Discretionary Authority
Deciding the asset, the amount, or buy versus sell - without asking first.
Third-Party Trading Authorization
Anyone other than the owner needs written authority to trade the account.