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Question

Difficulty: MediumSettlement Dates, Trade Confirmations, and Corporate Actions

Match each settlement, confirmation, or corporate action term on the left with its correct regulatory definition or operational requirement on the right.

  • Regular-Way Equity SettlementOwnership transfer and payment completion occurring on the business day immediately following the trade date (T+1T+1)
  • Agency Capacity DisclosureRequirement to disclose the specific commission amount charged on the customer trade confirmation
  • Ex-Dividend DateThe first date a security trades without the right to receive an upcoming dividend, set by FINRA/SRO rules
  • Reverse Stock SplitA corporate action that reduces the overall number of outstanding shares while proportionally increasing the market price per share

Answer

Regular-Way Equity Settlement matches with T+1T+1 settlement; Agency Capacity Disclosure matches with disclosing commission; Ex-Dividend Date matches with trading without dividend rights; Reverse Stock Split matches with reducing share count while increasing per-share price.
Each term is correctly matched to its official regulatory standard or corporate finance definition under FINRA/SEC guidelines.

Step-by-Step Solution

1
Identify regular-way settlement rule for corporate equity securities.
Regular-way settlement is standard T+1T+1 (trade date plus one business day).
Current SEC rules mandate a one-day settlement window for equity transactions.
2
Determine confirmation requirements for broker-dealer capacity.
Agency trades require disclosing commission amounts on the trade confirmation.
Broker-dealers operating as agents act as middlemen and charge commissions, which must be itemized.
3
Recall the definition and function of the ex-dividend date.
The ex-dividend date marks when stock trades without dividend rights.
Buyers purchasing on or after the ex-dividend date will not be listed as shareholders of record on the record date.
4
Identify the mechanics of a reverse stock split.
A reverse split decreases total shares outstanding and increases the market price per share proportionally.
The corporate action consolidates existing shares without changing total capitalization.

Key Concept

Settlement Cycles, Trade Confirmation Disclosures, and Corporate Action Mechanics
Estimated Time:1m 30s
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Topics

Settlement Dates, Trade Confirmations, and Corporate Actions