Accounts and Positions Glossary · Investing

ACATS: DTCC's Automated Customer Account Transfer Service, which moves a customer's securities and cash in kind between NSCC members under FINRA Rule 11870 (Funding & Account Transfers).
Adequate identification: naming the lots a sale relieves to the broker by the time of the sale, confirmed by the broker in writing; a standing order counts (Cost Basis, Tax Lots & Wash Sales).
Airdrop: new tokens distributed to holders' addresses; for an exchange customer, ordinary income at fair market value when the exchange credits them (Rev. Rul. 2019-24) (Corporate Actions & Asset Events).
Average basis: a cost basis method that averages the basis of identical shares in an account, allowed only for mutual fund and dividend reinvestment plan shares (Cost Basis, Tax Lots & Wash Sales).
Bank sweep program: a broker's service that moves customers' free credit balances into deposits at program banks, insured by pass-through coverage and no longer the broker's liability (Cash, Sweeps & Yield).
Buying power: the largest purchase an account may make now, computed from settled and unsettled cash, margin equity, holds and instant credit; a formula over the ledger, not a balance in it (Ledgers, Positions & Buying Power).
Carrying firm: in an ACATS transfer, the broker that holds the account and must validate or take exception within one business day (Funding & Account Transfers).
Cash account: a brokerage account that pays for purchases in full within the Regulation T payment period, without borrowing (Ledgers, Positions & Buying Power).
Cash in lieu: cash paid instead of a fractional share in a reverse split, merger or spinoff; treated as a sale of the fraction (Corporate Actions & Asset Events).
Cash liquidation violation: in a cash account, covering a purchase by selling other securities after the purchase date, so the covering sale settles after the purchase does (Ledgers, Positions & Buying Power).
Composite (consolidated) 1099: one year-end document carrying a brokerage account's 1099-B, 1099-DIV, 1099-INT and 1099-MISC, furnished by February 15 (Confirms, Statements & Tax Forms).
Confirmation (Rule 10b-10): the written notice of a securities trade, sent at or before completion, with price, quantity, capacity and order flow disclosures (Confirms, Statements & Tax Forms).
Core position: the cash vehicle a brokerage account's uninvested cash sits in by default, chosen at opening: a money market fund, a bank sweep or a free credit balance (Cash, Sweeps & Yield).
Covered security: a security the broker must report basis for: acquired after the applicable date (2011 for most stock, 2026 for digital assets in custody) in the account, or transferred in with a statement (Cost Basis, Tax Lots & Wash Sales).
Custodial account (UTMA/UGMA): an account a minor owns from the first deposit, managed by an adult custodian, who is the CIP customer, until the age the state's act sets (Opening Accounts).
De minimis error safe harbor: the rule that a reported amount within $100 (or $25 of withholding) of correct need not be corrected unless the recipient elects corrections (Confirms, Statements & Tax Forms).
Deficit (instant deposit): a negative cash balance left when a deposit the customer already spent through instant credit is returned; due immediately (Funding & Account Transfers).
Deposit beta: the share of a change in market rates a cash program passes to customers; a low beta earns more as rates rise and loses all of a cut (Cash, Sweeps & Yield).
Dollar-based (notional) order: an order stating the amount to spend, converted to a quantity at the fill price and the instrument's precision (Fractional Shares & Recurring Investing).
DRIP (dividend reinvestment): a standing instruction to buy more of a security with its dividend, carried out as an order after the pay date, each purchase its own lot (Fractional Shares & Recurring Investing).
Ex-date: the first day a buyer no longer receives a distribution; the record date for distributions under 25% of value, the day after the payable date for 25% or more (Corporate Actions & Asset Events).
Excess bank: the bank in a sweep program that takes every dollar above the per-bank placements, without limit and uninsured above $250,000 (Cash, Sweeps & Yield).
FIFO (first in, first out): the default lot relief method: without identification, the earliest acquired shares are sold first (Cost Basis, Tax Lots & Wash Sales).
Form 1042-S: the year-end form for US-source income paid to a foreign person and the tax withheld, furnished by March 15 (Confirms, Statements & Tax Forms).
Form 1099-B: the broker's report of proceeds from securities sales, with adjusted basis, term and disallowed wash sale loss for covered lots (Confirms, Statements & Tax Forms).
Form 1099-DA: the broker's report of digital asset sales: gross proceeds from 2025, basis for covered units from 2026 (Confirms, Statements & Tax Forms).
Form 8937: an issuer's report of an organizational action that affects holders' basis, due by the 45th day after the action (Cost Basis, Tax Lots & Wash Sales).
Fractional inventory: the firm's own holding of fractional shares left over from batches, a firm position entitled to dividends and corporate actions like any holder (Fractional Shares & Recurring Investing).
Free credit balance: cash a broker owes a customer, payable on demand, carried on the broker's books, usable in its business within Rule 15c3-3 and protected by SIPC up to $250,000 (Cash, Sweeps & Yield).
Free riding: buying securities and paying for them with the proceeds of selling the same securities; under Regulation T it freezes a cash account's credit for 90 days (Ledgers, Positions & Buying Power).
Global allocation: under Rev. Proc. 2024-28, a rule written before 2025 for assigning unused digital asset basis to wallets and accounts (Cost Basis, Tax Lots & Wash Sales).
Good faith violation: in a cash account, selling a security bought with unsettled proceeds before those proceeds settle (Ledgers, Positions & Buying Power).
Hard fork: a permanent split of a chain into two; no income without new units, income when new units are received (Corporate Actions & Asset Events).
Holding period: the time an asset is held, counted from the day after acquisition; more than one year is long-term (Cost Basis, Tax Lots & Wash Sales).
Instant deposit: a platform's advance of part of a pending bank deposit so the customer can trade at once; credit the firm extends against a reversible payment (Funding & Account Transfers).
Investment profile: the customer's income, net worth, liquid net worth, objectives, experience and affiliations, collected under FINRA 2090 and 4512 and Rule 17a-3(a)(17), versioned and confirmed every 36 months (Opening Accounts).
Location (ledger): where an asset sits (a wallet, a bank account, DTC, a custodian), carried on the ledger's omnibus lines opposite the owners' lines so each instrument sums to zero (Ledgers, Positions & Buying Power).
Lot engine: the processor that opens, relieves, adjusts and restates tax lots from executions, asset events, transfers and elections (Cost Basis, Tax Lots & Wash Sales).
Margin disclosure statement: the FINRA Rule 2264 statement given to non-institutional customers at or before opening a margin account and annually after (Opening Accounts).
Nontransferable asset: a position the receiving firm won't accept in an ACATS transfer, such as a proprietary fund, which the customer must instruct the carrying firm to liquidate, retain or transfer otherwise (Funding & Account Transfers).
Omnibus wallet: an on-chain wallet holding many customers' crypto in the platform's name, whose ownership only the internal ledger records (Ledgers, Positions & Buying Power).
Options approval level: a firm's own tier of permitted option strategies, granted in writing by a principal under FINRA Rule 2360(b)(16), which defines no tiers itself (Opening Accounts).
Pass-through voting: letting the holders of a fund or a fractional position instruct how the shares held for them are voted (Corporate Actions & Asset Events).
Payment period: under Regulation T, the standard settlement cycle plus two business days, the time a cash account customer has to pay for a purchase (Ledgers, Positions & Buying Power).
Periodic plan statement: the Rule 10b-10(b) quarterly statement that replaces per-trade confirmations for plan transactions, with prior written notice (Confirms, Statements & Tax Forms).
Receiving firm: in an ACATS transfer, the broker the customer is moving to, which submits the transfer instruction (Funding & Account Transfers).
Record date: the date on which holders on the issuer's books are entitled to a distribution or a vote (Corporate Actions & Asset Events).
Residual (ACATS): a dividend, interest payment or other credit that reaches the carrying firm after a full transfer, forwarded within ten business days for at least six months (Funding & Account Transfers).
Residual (fractional): the part of a whole share bought for a batch that customers didn't take, held in the firm's fractional inventory (Fractional Shares & Recurring Investing).
Reverse split: a consolidation of shares (1 for 10, say) that keeps total basis, with fractions paid as cash in lieu (Corporate Actions & Asset Events).
Riskless principal: buying in the market to fill a customer order at the same price, acting as principal; one way brokers fill fractional orders (Fractional Shares & Recurring Investing).
Settlement-date position: the quantity an account holds counting only lines whose settlement date has arrived; what is at the depository and what the stock record reflects (Ledgers, Positions & Buying Power).
Specific identification: choosing which lots a sale relieves, by instruction at the time of sale or by a standing order such as highest cost (Cost Basis, Tax Lots & Wash Sales).
Specific unit allocation: under Rev. Proc. 2024-28, assigning identified units of unused digital asset basis to particular wallets or accounts (Cost Basis, Tax Lots & Wash Sales).
Specified adult: under FINRA Rule 2165, a customer 65 or older, or an adult the firm reasonably believes can't protect their own interests, whose account a firm may hold for suspected exploitation (Opening Accounts).
Spinoff: a distribution of a subsidiary's shares to the parent's holders; in a tax-free spinoff, basis is split by relative fair market value and holding periods carry over (Corporate Actions & Asset Events).
Stock record: the broker-dealer's securities record under Rule 17a-3(a)(5), listing for each security who owns it and where it is, as of settlement dates, long equal to short (Ledgers, Positions & Buying Power).
Sweep spread: the difference between what program banks pay for swept cash and what the customer receives, kept by the broker or its affiliated bank (Cash, Sweeps & Yield).
Temporary hold (FINRA 2165): a hold on disbursements or transactions in a specified adult's account for suspected exploitation, up to 15 business days, extendable by 10 and then 30 (Opening Accounts).
Tender offer: an offer to buy holders' shares at a stated price, open at least 20 business days under Rule 14e-1 (Corporate Actions & Asset Events).
TIF (transfer instruction): the customer-signed instruction a receiving firm submits to start an ACATS transfer (Funding & Account Transfers).
Token migration: a move of a token to a new contract or native asset at a fixed ratio, applied as a conversion of every holder's balance (Corporate Actions & Asset Events).
Trade-date position: the quantity an account holds counting every executed trade, settled or not; the basis for market value, margin and tax lots (Ledgers, Positions & Buying Power).
Transfer statement (6045A): the statement of lots, basis and acquisition dates a delivering broker sends within 15 days after a transfer settles (Cost Basis, Tax Lots & Wash Sales).
Value hold: a withdrawal restriction equal to a reversible deposit's amount, applied to cash or crypto alike so ACH-funded assets can't leave before the deposit is safe (Funding & Account Transfers).
Wash sale: a loss sale with substantially identical stock acquired within 30 days before or after; the loss is disallowed and added to the replacement's basis, with the holding period carried over (Cost Basis, Tax Lots & Wash Sales).
Withdrawable cash: settled cash less holds, instant credit outstanding, reserved orders and margin requirements; what may leave the firm today (Ledgers, Positions & Buying Power).

ACATS: DTCC's Automated Customer Account Transfer Service, which moves a customer's securities and cash in kind between NSCC members under FINRA Rule 11870 (Funding & Account Transfers).
Adequate identification: naming the lots a sale relieves to the broker by the time of the sale, confirmed by the broker in writing; a standing order counts (Cost Basis, Tax Lots & Wash Sales).
Airdrop: new tokens distributed to holders' addresses; for an exchange customer, ordinary income at fair market value when the exchange credits them (Rev. Rul. 2019-24) (Corporate Actions & Asset Events).
Average basis: a cost basis method that averages the basis of identical shares in an account, allowed only for mutual fund and dividend reinvestment plan shares (Cost Basis, Tax Lots & Wash Sales).
Bank sweep program: a broker's service that moves customers' free credit balances into deposits at program banks, insured by pass-through coverage and no longer the broker's liability (Cash, Sweeps & Yield).
Buying power: the largest purchase an account may make now, computed from settled and unsettled cash, margin equity, holds and instant credit; a formula over the ledger, not a balance in it (Ledgers, Positions & Buying Power).
Carrying firm: in an ACATS transfer, the broker that holds the account and must validate or take exception within one business day (Funding & Account Transfers).
Cash account: a brokerage account that pays for purchases in full within the Regulation T payment period, without borrowing (Ledgers, Positions & Buying Power).
Cash in lieu: cash paid instead of a fractional share in a reverse split, merger or spinoff; treated as a sale of the fraction (Corporate Actions & Asset Events).
Cash liquidation violation: in a cash account, covering a purchase by selling other securities after the purchase date, so the covering sale settles after the purchase does (Ledgers, Positions & Buying Power).
Composite (consolidated) 1099: one year-end document carrying a brokerage account's 1099-B, 1099-DIV, 1099-INT and 1099-MISC, furnished by February 15 (Confirms, Statements & Tax Forms).
Confirmation (Rule 10b-10): the written notice of a securities trade, sent at or before completion, with price, quantity, capacity and order flow disclosures (Confirms, Statements & Tax Forms).
Core position: the cash vehicle a brokerage account's uninvested cash sits in by default, chosen at opening: a money market fund, a bank sweep or a free credit balance (Cash, Sweeps & Yield).
Covered security: a security the broker must report basis for: acquired after the applicable date (2011 for most stock, 2026 for digital assets in custody) in the account, or transferred in with a statement (Cost Basis, Tax Lots & Wash Sales).
Custodial account (UTMA/UGMA): an account a minor owns from the first deposit, managed by an adult custodian, who is the CIP customer, until the age the state's act sets (Opening Accounts).
De minimis error safe harbor: the rule that a reported amount within $100 (or $25 of withholding) of correct need not be corrected unless the recipient elects corrections (Confirms, Statements & Tax Forms).
Deficit (instant deposit): a negative cash balance left when a deposit the customer already spent through instant credit is returned; due immediately (Funding & Account Transfers).
Deposit beta: the share of a change in market rates a cash program passes to customers; a low beta earns more as rates rise and loses all of a cut (Cash, Sweeps & Yield).
Dollar-based (notional) order: an order stating the amount to spend, converted to a quantity at the fill price and the instrument's precision (Fractional Shares & Recurring Investing).
DRIP (dividend reinvestment): a standing instruction to buy more of a security with its dividend, carried out as an order after the pay date, each purchase its own lot (Fractional Shares & Recurring Investing).
Ex-date: the first day a buyer no longer receives a distribution; the record date for distributions under 25% of value, the day after the payable date for 25% or more (Corporate Actions & Asset Events).
Excess bank: the bank in a sweep program that takes every dollar above the per-bank placements, without limit and uninsured above $250,000 (Cash, Sweeps & Yield).
FIFO (first in, first out): the default lot relief method: without identification, the earliest acquired shares are sold first (Cost Basis, Tax Lots & Wash Sales).
Form 1042-S: the year-end form for US-source income paid to a foreign person and the tax withheld, furnished by March 15 (Confirms, Statements & Tax Forms).
Form 1099-B: the broker's report of proceeds from securities sales, with adjusted basis, term and disallowed wash sale loss for covered lots (Confirms, Statements & Tax Forms).
Form 1099-DA: the broker's report of digital asset sales: gross proceeds from 2025, basis for covered units from 2026 (Confirms, Statements & Tax Forms).
Form 8937: an issuer's report of an organizational action that affects holders' basis, due by the 45th day after the action (Cost Basis, Tax Lots & Wash Sales).
Fractional inventory: the firm's own holding of fractional shares left over from batches, a firm position entitled to dividends and corporate actions like any holder (Fractional Shares & Recurring Investing).
Free credit balance: cash a broker owes a customer, payable on demand, carried on the broker's books, usable in its business within Rule 15c3-3 and protected by SIPC up to $250,000 (Cash, Sweeps & Yield).
Free riding: buying securities and paying for them with the proceeds of selling the same securities; under Regulation T it freezes a cash account's credit for 90 days (Ledgers, Positions & Buying Power).
Global allocation: under Rev. Proc. 2024-28, a rule written before 2025 for assigning unused digital asset basis to wallets and accounts (Cost Basis, Tax Lots & Wash Sales).
Good faith violation: in a cash account, selling a security bought with unsettled proceeds before those proceeds settle (Ledgers, Positions & Buying Power).
Hard fork: a permanent split of a chain into two; no income without new units, income when new units are received (Corporate Actions & Asset Events).
Holding period: the time an asset is held, counted from the day after acquisition; more than one year is long-term (Cost Basis, Tax Lots & Wash Sales).
Instant deposit: a platform's advance of part of a pending bank deposit so the customer can trade at once; credit the firm extends against a reversible payment (Funding & Account Transfers).
Investment profile: the customer's income, net worth, liquid net worth, objectives, experience and affiliations, collected under FINRA 2090 and 4512 and Rule 17a-3(a)(17), versioned and confirmed every 36 months (Opening Accounts).
Location (ledger): where an asset sits (a wallet, a bank account, DTC, a custodian), carried on the ledger's omnibus lines opposite the owners' lines so each instrument sums to zero (Ledgers, Positions & Buying Power).
Lot engine: the processor that opens, relieves, adjusts and restates tax lots from executions, asset events, transfers and elections (Cost Basis, Tax Lots & Wash Sales).
Margin disclosure statement: the FINRA Rule 2264 statement given to non-institutional customers at or before opening a margin account and annually after (Opening Accounts).
Nontransferable asset: a position the receiving firm won't accept in an ACATS transfer, such as a proprietary fund, which the customer must instruct the carrying firm to liquidate, retain or transfer otherwise (Funding & Account Transfers).
Omnibus wallet: an on-chain wallet holding many customers' crypto in the platform's name, whose ownership only the internal ledger records (Ledgers, Positions & Buying Power).
Options approval level: a firm's own tier of permitted option strategies, granted in writing by a principal under FINRA Rule 2360(b)(16), which defines no tiers itself (Opening Accounts).
Pass-through voting: letting the holders of a fund or a fractional position instruct how the shares held for them are voted (Corporate Actions & Asset Events).
Payment period: under Regulation T, the standard settlement cycle plus two business days, the time a cash account customer has to pay for a purchase (Ledgers, Positions & Buying Power).
Periodic plan statement: the Rule 10b-10(b) quarterly statement that replaces per-trade confirmations for plan transactions, with prior written notice (Confirms, Statements & Tax Forms).
Receiving firm: in an ACATS transfer, the broker the customer is moving to, which submits the transfer instruction (Funding & Account Transfers).
Record date: the date on which holders on the issuer's books are entitled to a distribution or a vote (Corporate Actions & Asset Events).
Residual (ACATS): a dividend, interest payment or other credit that reaches the carrying firm after a full transfer, forwarded within ten business days for at least six months (Funding & Account Transfers).
Residual (fractional): the part of a whole share bought for a batch that customers didn't take, held in the firm's fractional inventory (Fractional Shares & Recurring Investing).
Reverse split: a consolidation of shares (1 for 10, say) that keeps total basis, with fractions paid as cash in lieu (Corporate Actions & Asset Events).
Riskless principal: buying in the market to fill a customer order at the same price, acting as principal; one way brokers fill fractional orders (Fractional Shares & Recurring Investing).
Settlement-date position: the quantity an account holds counting only lines whose settlement date has arrived; what is at the depository and what the stock record reflects (Ledgers, Positions & Buying Power).
Specific identification: choosing which lots a sale relieves, by instruction at the time of sale or by a standing order such as highest cost (Cost Basis, Tax Lots & Wash Sales).
Specific unit allocation: under Rev. Proc. 2024-28, assigning identified units of unused digital asset basis to particular wallets or accounts (Cost Basis, Tax Lots & Wash Sales).
Specified adult: under FINRA Rule 2165, a customer 65 or older, or an adult the firm reasonably believes can't protect their own interests, whose account a firm may hold for suspected exploitation (Opening Accounts).
Spinoff: a distribution of a subsidiary's shares to the parent's holders; in a tax-free spinoff, basis is split by relative fair market value and holding periods carry over (Corporate Actions & Asset Events).
Stock record: the broker-dealer's securities record under Rule 17a-3(a)(5), listing for each security who owns it and where it is, as of settlement dates, long equal to short (Ledgers, Positions & Buying Power).
Sweep spread: the difference between what program banks pay for swept cash and what the customer receives, kept by the broker or its affiliated bank (Cash, Sweeps & Yield).
Temporary hold (FINRA 2165): a hold on disbursements or transactions in a specified adult's account for suspected exploitation, up to 15 business days, extendable by 10 and then 30 (Opening Accounts).
Tender offer: an offer to buy holders' shares at a stated price, open at least 20 business days under Rule 14e-1 (Corporate Actions & Asset Events).
TIF (transfer instruction): the customer-signed instruction a receiving firm submits to start an ACATS transfer (Funding & Account Transfers).
Token migration: a move of a token to a new contract or native asset at a fixed ratio, applied as a conversion of every holder's balance (Corporate Actions & Asset Events).
Trade-date position: the quantity an account holds counting every executed trade, settled or not; the basis for market value, margin and tax lots (Ledgers, Positions & Buying Power).
Transfer statement (6045A): the statement of lots, basis and acquisition dates a delivering broker sends within 15 days after a transfer settles (Cost Basis, Tax Lots & Wash Sales).
Value hold: a withdrawal restriction equal to a reversible deposit's amount, applied to cash or crypto alike so ACH-funded assets can't leave before the deposit is safe (Funding & Account Transfers).
Wash sale: a loss sale with substantially identical stock acquired within 30 days before or after; the loss is disallowed and added to the replacement's basis, with the holding period carried over (Cost Basis, Tax Lots & Wash Sales).
Withdrawable cash: settled cash less holds, instant credit outstanding, reserved orders and margin requirements; what may leave the firm today (Ledgers, Positions & Buying Power).