Listen to a Business English Dialogue About Discretionary order
Hannah: Hi Arthur, have you heard about discretionary orders in finance? It’s when investors give brokers the authority to buy or sell securities without prior approval for each transaction.
Arthur: Oh, I see. Why would investors use discretionary orders?
Hannah: Well, investors might use discretionary orders to take advantage of market opportunities quickly without having to constantly monitor the market or make decisions themselves.
Arthur: Are there any risks associated with discretionary orders?
Hannah: Yes, there’s a risk that brokers may not always make decisions in the investor’s best interest, or that they may exceed the agreed-upon parameters, leading to potential losses.
Arthur: How are discretionary orders typically managed by brokers?
Hannah: Brokers are typically required to follow specific guidelines or investment objectives outlined by the investor when executing discretionary orders.
Arthur: Can discretionary orders be revoked or modified by investors?
Hannah: Yes, investors usually have the ability to revoke or modify discretionary orders at any time, although there may be some restrictions or processes involved.
Arthur: How do discretionary orders differ from non-discretionary orders?
Hannah: Non-discretionary orders require investors to approve each transaction before it’s executed, while discretionary orders give brokers more autonomy to make decisions on behalf of the investor.
Arthur: Can you provide an example of when a discretionary order might be used?
Hannah: Sure, for example, a busy investor might give their broker discretionary authority to buy or sell stocks based on certain criteria, allowing them to focus on other aspects of their life or business.
Arthur: Thanks for explaining, Hannah. Discretionary orders seem like a convenient but potentially risky option for investors.
Hannah: You’re welcome, Arthur. It’s important for investors to carefully consider the terms and conditions of discretionary orders and ensure they trust their broker to act in their best interests.