What is the arrangement called when a broker-dealer executes transactions but does not process them?

The correct arrangement where a broker-dealer executes transactions but does not process them is known as a fully disclosed account. In this setup, the broker-dealer acts as an intermediary, collecting orders from clients and executing trades on their behalf. However, it is the clearing firm that processes the transactions, ensuring the trades are settled and that funds and securities are exchanged appropriately. This arrangement allows the broker-dealer to focus on client relationships and execution without the need to manage the complexities of clearing and settlement, which is handled by a different entity.

In contrast, a prime broker provides a range of services including execution and clearing, often for hedge funds or institutional investors, offering more comprehensive support. A clearing broker is specifically responsible for the execution and settlement of securities transactions, making it a more hands-on role than that of a fully disclosed account. An omnibus account refers to an account that holds numerous clients' trades as a single entity, simplifying the reporting process but not aligning with the definition of executing without processing transactions. Thus, a fully disclosed account is the correct choice in this context.