A retail customer purchases 100 shares of a corporate equity security through a broker-dealer. The firm fills the order directly out of its existing inventory. Which of the following disclosures must appear on the customer's trade confirmation regarding the firm's capacity and compensation?
- The confirmation must disclose that the firm acted as a principal and include the mark-up charged on the transaction.Cevap
- BThe confirmation must disclose that the firm acted as an agent and include the commission charged to the customer.
- CThe confirmation must reflect a standard regular-way settlement date of two business days after the trade date ().
- DThe confirmation must list the Depository Trust Company (DTC) as the entity responsible for trade clearance and central order netting.
Cevap
The trade confirmation must disclose that the broker-dealer acted as a principal and include the mark-up charged on the transaction.
When a broker-dealer executes a customer transaction out of its own inventory, it operates as a principal (dealer) for its own account. FINRA and SEC rules mandate that trade confirmations state the capacity in which the broker-dealer acted (principal) and disclose the mark-up or mark-down charged on the transaction.
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Broker-Dealer Capacity and Compensation Disclosure on Trade Confirmations
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