Also found in: Dictionary, Thesaurus, Legal, Idioms, Wikipedia.
Freedom given to the floor broker by an investor to use his judgment regarding the execution of an order. Discretion can be limited, as in the case of a limit order that gives the floor broker some distance from the stated limit price to use his judgment in executing the order. Discretion can also be unlimited, as in the case of a market-not-held order. See also: Market Not Held Order.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
The ability to make decisions on one's own without the need to consult others. For example, a discretionary account gives a broker the right to make significant investment decisions without permission from or even consultation with the account's owner. Likewise, certain investments give an investor more discretion than others. An option contract allows but does not require the holder to buy (or sell) the underlying, while a futures contract requires the exchange to take place.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved