A retail customer purchases shares of common stock through a registered broker-dealer. The firm executes the order by selling shares directly from its own inventory. Which of the following capacity disclosures and compensation details must be included on the trade confirmation sent to the customer?
- The confirmation must state that the firm acted as a principal and disclose the mark-up charged.Cevap
- BThe confirmation must state that the firm acted as an agent and disclose the commission charged.
- CThe confirmation must state that regular-way settlement occurs in T+2 business days and disclose the commission charged.
- DThe confirmation is exempt from disclosing broker-dealer capacity if the trade is settled through the National Securities Clearing Corporation.
Cevap
The trade confirmation must state that the firm acted as a principal and disclose the mark-up charged on the transaction.
Under SEC Rule 10b-10 and FINRA rules, when a broker-dealer fills a trade out of its own inventory, it operates as a principal (dealer). The written trade confirmation delivered at or before completion of the transaction must explicitly disclose that the firm acted as principal and state the mark-up added to the price.
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Broker-Dealer Capacity and Trade Confirmation Disclosures