Principal trades:
We (broker) trade our own account and at our own risk. These trades are booked to firm book.
Agency trades:
We (broker) trade on behalf of our client. Performing as an agent. These trades are booked to agency book.
Facilitation trades:
We (facilitation team in broker) make markets in OTC or other markets, and promise client to trade at a ready available price and quantity. We take the risk of price differences. This trades booked to the brokers firm book.
Warehouse trades:
Our client "warehouses" small lots of shares under the name of us (broker). Our client use the warehousing technique of share acquisition when they wish to remain anonymous, yet want to gradually build up holdings. We may see the same block trade being filled with new client trades day after day on same equity at different price. And the buyer of the trade is our warehouse account.
Custody trades:
A client trade. The difference is the client want us to act as their custody to keep stock for them. If we does not have a custodian business license, we will then open an firm account with our custodian; and keep the stock of client in that firm account. Therefore, the uniqueness of custody trade is that the our SSI is a firm SSI, and cpty SSI is also a firm SSI (for the custodian account).
Step In:
Other brokerage house executed for client. Client instruct the other broker to pass certain amount of executed trades (hence the commission) to us as gratitude for good research or other service. In this case, we are Step In into the trade.
Since we only receive the client trade (with commission charged), a market trade needs to be created to balance the agency book. This market trade should be booked against a special firm sub-account and tagged as "Step In", to indicate that it is not really from market execution.
Step Out:
The same case above, instead of we "Step In" into others' trade; we may need to "Step Out" from our execution, and allow another broker to "Step In". In the case of "Step Out", we have extra market executions which needs to be balanced by additional client trade on agency book. Those client trades are booked to a special firm sub-account, with zero commission, and tagged as "Step Out".