A firm acting as an agent makes money by:
Profiting from the spread
Providing advice
Charging their client a commission
Trading against its own order book
When a firm acts as an agent, it executes trades on behalf of clients and earns a commission for each transaction.
Why is Option C Correct?
Agents do not take ownership of securities but facilitate transactions.
They charge a fixed fee or percentage-based commission for each trade executed.
Why Not Other Options?
A (Profiting from the spread) → Market makers profit from bid-ask spreads, not agents.
B (Providing advice) → Advice is provided by investment advisers, not agents.
D (Trading against its own order book) → Agents do not take opposing positions; this applies to principal trading.
???? Reference: FCA Handbook (Market Conduct Rules), CISI Wealth & Investment Management.
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