Which of the following is NOT a condition for permitting the aggregation of client trade orders?

The correct answer is that aggregation must always occur is NOT a condition for permitting the aggregation of client trade orders. In the context of investment advisory practices, aggregation refers to the combination of multiple client orders to enhance execution quality or reduce trading costs.

The conditions that typically support this practice are designed to ensure fairness and transparency among clients. A written allocation statement ensures that there is a clear record of how the aggregated orders will be split among the involved clients, promoting accountability and compliance with fiduciary duties. The stipulation of no additional remuneration prevents conflicts of interest that could arise if an adviser financially benefits from the aggregated trades at the expense of clients. Lastly, ensuring that the aggregation is consistent with seeking best execution aligns the adviser’s responsibilities with the best interests of their clients, emphasizing the pursuit of optimal trade outcomes.

However, stating that aggregation must always occur implies a requirement rather than a condition that governs its application. In practice, not all situations necessitate aggregation; it is a discretionary process based on the adviser’s judgment and the specific circumstances of the trade. Hence, the idea that aggregation is an absolute requirement is incorrect.