What does the term 'non-client order' refer to in trading?

What does the term 'non-client order' refer to in trading?

• A. An order for the account of a client
• B. An order for the account of an employee of a dealer member
• C. An order that has no priority in execution
• D. An investment order that is not time-sensitive

Answer: (B)

The term 'non-client order' specifically refers to an order that is executed for the account of a dealer member's employee, rather than for an external client. This kind of order typically represents trades made for the personal account of the dealer member's staff, which can include trades that employees make with their own funds.

Understanding the context of non-client orders is essential because they often have different regulatory considerations compared to client orders. For instance, there are specific rules that govern how non-client orders should be handled, particularly to avoid conflicts of interest and ensure fairness in the market.

Other options, on the other hand, refer to different concepts related to trading. An order for the account of a client clearly indicates a transaction made with the intent of serving a customer, which differs fundamentally from the concept of a non-client order. The notion of execution priority does not pertain directly to the classification of orders but rather to how those orders are executed once they are entered. Lastly, while time sensitivity could be a characteristic of certain orders, it does not define a non-client order specifically. Thus, the correct identification of 'non-client order' is crucial for understanding trading practices within the financial markets and adhering to ethical standards in broker-dealer operations.