What type of account arrangement allows a broker-dealer to know the identity of the customer while executing but not processing transactions?

A fully disclosed account arrangement is one where the broker-dealer has knowledge of the identity of the customer for the purpose of executing transactions. In this type of account, customers maintain their own accounts directly with a clearing firm, while the broker-dealer facilitates the transaction on behalf of the client. This setup allows the broker-dealer to execute the trades while keeping the customer's identity confidential in the processing phase.

This arrangement is particularly useful as it enables more efficient trade execution without exposing the customer’s details to various parties involved in the processing of a transaction. Unlike in other types of accounts, where the broker-dealer may be unaware of the underlying customer's identity during processing, a fully disclosed account clearly delineates the relationship and responsibilities, promoting transparency and compliance with regulatory requirements.

In contrast, other account types, such as margin accounts or institutional accounts, may involve different levels of transparency or relationship management, but do not specifically focus on the brokerage's ability to execute without processing knowledge of the customer's identity. A limited partnership usually refers to an investment structuring rather than a customer account type and does not directly relate to transaction processing or execution dynamics within a brokerage context.