We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is an Omnibus Account?

By A. Leverkuhn
Updated: May 16, 2024
Views: 70,760
Share

An omnibus account is a specific kind of stock holding account that involves multiple investors. In this type of account, the account holder is a “futures merchant” also called a stock broker or money manager, who is holding the investments of various clients in one account which he or she trades on behalf of his or her client base. This way, each of the individual investors does not have his or her name attached to the account, but they are still actual stock holders.

The broker who handles the omnibus account for his or her clients, sometimes called the originating broker, may make deals with other brokers to benefit the investors who are involved in the account. The broker may also perform other tasks to help conserve the value of the account. Lots of brokers charge a “futures commission” for some of these routine tasks, and these may differ according to the firm that offers them.

Some of the benefits of an omnibus account, also called a “cash management” or “asset management” account, involve possibly quicker distribution of dividends and information regarding the stock. The kind of third-party administration provided by the account is just part of what an accomplished money manager can do for clients to expedite their investment processes, and dial in a specific amount of risk for their portfolio as desired.

An alternative to an omnibus account is a “street account” in which the investor leaves the stock holding in the name of the broker. This kind of account can cause problems with direct stockholder participation, but it does make some kinds of investments more convenient. As the “beneficial owner,” the individual investor can buy and sell without keeping track of each particular transaction or swapping out paper stock certificates.

The omnibus account represents another way for investors to bypass some of the “red tape” associated with buying and selling stocks. It’s important for investors who choose these options to look at the fees their brokerage charges, and compare them with others to see if they are fair according to the greater community of services. With the right connection to a broker, an investor can profit from using tools like the omnibus account to connect with the market in specific ways for either long term or short term trading.

Share
SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Discussion Comments
By Orcadeal — On Dec 12, 2013

No, an omnibus account definition is not the same as a hedge fund definition, though both vehicles do use multiple investors or partnerships.

It is important to mention that omnibus accounts can be linked to either a hedge or mutual fund, but are otherwise different entities.

A hedge fund is unique by its aggressiveness; investors are using leveraging, shorting, and derivatives — all risky methods that are meant to achieve big pay offs.

By Orcadeal — On Dec 11, 2013

So, is an "omnibus account" a type of hedge fund? Don't hedge funds also involve multiple investors?

Share
https://www.smartcapitalmind.com/what-is-an-omnibus-account.htm
Copy this link
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.