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PRIME BROKER SERVICES:
United Asset Strategies, Inc. provides this important resource, which allows us to
execute bond trades with a variety of brokers rather than being limited to the dealer associated with
the custody of your account. UASI is able to select the best price from numerous bond issues, and
pass along these savings to our clients. Investors might be surprised to find that hidden costs
linked with purchasing bonds can be significantly higher than trading stocks. Stock trades are executed
on an exchange and there is tremendous access to an exchange’s inventory and bid/ask price. Bonds
are traded in an over-the-counter market where dealers trade with each other and keep an inventory of
bonds. Reasonable markups are considered fair compensation for this risk of holding an inventory. Each
firm establishes its own markup, which varies depending upon a number of factors. While there are
guidelines, no formal rules exist as to when a markup becomes excessive nor are there regulations
regarding disclosure to an investor. Dealers are free to tack on excessive charges to a bond whose buyer
is unaware of the accurate price and markup. UASI simply goes to another dealer if we are not satisfied
with the price.
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