If a broker-dealer executes but does not process transactions, and the processing firm knows the customers' identities, what is this arrangement known as?

The arrangement where a broker-dealer executes transactions but does not process them, while the processing firm is aware of the customers' identities, is referred to as a fully disclosed account. In this scenario, the customer’s information is fully shared with the processing firm, meaning that there is transparency regarding who the customers are and the nature of their transactions. This arrangement ensures that the processing firm can carry out its duties while being aware of the identities and needs of the customers involved.

In contrast, an undisclosed account typically involves a situation where the identity of the customer is not known to the processing firm, creating a degree of anonymity. Soft dollar arrangements and referral arrangements pertain to different aspects of broker-dealer practices, where soft dollars focus on the compensation for advisory services using commission dollars, and referral arrangements involve payments for directing clients to specific services or products. Therefore, the term that accurately describes the situation in which customer identities are known while transactions are executed by a broker-dealer and processed by another firm is indeed a fully disclosed account.